Forum Replies Created
Definitely investigate taking some equity out of your PPOR for your next IP as the funds to complete (deposit and costs) as this has tax deductibility. Ensure that you take it out as a separate loan/split, not an increase against your existing loan.
As Terry has mentioned, all investment loans are best suited to I/O, whereas you might prefer to have P&I plus an offset (or I/O plus offset) against your primary residence (both for future deductibility and as a buffer for future events).
Hi vj4mj2,
Your aims are definitely not overly ambitious and congratulations for making the first step!
As it seems you are looking for capital growth, South Frankston might be a bit of a stretch for great capital growth in the next 5 years. The area has been "the next big thing" for far too long for my liking and also sits in part of the mortgage belt that could see problems should interest rates increase markedly in the next few months and even to 2013.
I definitely prefer the inner 15km ring (and avoid CBD apartments) for capital growth and units can offer this for you as well.You also have the distinct benefit of removing equity from your PPOR to contribute to the funds to complete the purchase of your IP (or even two IP's!) so you don't need to use any cash if necessary.
We run free property investing education seminars in Melbourne that cover a lot of these competing ideas might be of use to you, the information is on our website.
Analysis AND Selling – sounds like a conflict of interest…
Hey Jack,
There was a nice little piece in the recent API magazine about investing after 40 that you might also find useful for other areas as well.
$600K can also get you some pretty prime property in a 2-10km range of the Melbourne CBD which have been earmarked as the next "boom" areas (although you'd struggle for a house!) and you wouldn't be waiting, but if your heart's set on something new in the Peninsula…
Best of luck with your new venture
We have a property analysis software that you might find useful. We use it as a part of our eSearch workshop in Melbourne. You can find details about this at our website: http://www.empowerwealth.com.au/esearch
…would definitely go to your conveyancer first and if you don't have one yet, would seek some qualified legal advice.
Hi Laurent,
I haven't used POSH so unfortunately can't make a comparison however the PIA software is very malleable with regard to inputs and alterations and I find it a great resource. Hopefully others will give an opinion on POSH.
If you have a loan, you can always try to have the valuation done by the bank, and perhaps they might do it for free (depending on the bank and the package you are in)…
Do you mean you decided to cancel (you said decided not to cancel)?
All depends on whether the contract should be "subject to purchaser finance" – "vendor's finance" sounds strange…
Regarding the last point, yes the seller can make such demands. This is to stop purchasers simply deciding they don't want to buy. You might have to prove that finance wasn't available in this case.
If there are serious problems with structure etc, then get in touch with a lawyer to understand your rights and what remedies you might have.
Hey Flare,
You can still get I/O and not moving it from CBA. Remember the costs to move loans is the discharge fee and possibly deferred establishment fees (if you've held the loan for less than 4 years) which can be expensive. Look into this before making the decision to move the loan as these are fees some don't consider until after they refinance the loan from their current lender.
As Jamie mentioned, perhaps have a chat with a good broker in your area and then all of your questions can be answered to your own specific needs.
Hi nightelves,
If you PM me I am happy to give you direct names of people we recommend in Melbourne.
You can also use a second split as a term loan (standard variable) with an offset account against it and use this as a deposit (although this option doesn't allow interest capitalisation with some banks).
The bank you are with will provide the valuation on your existing IP.
The second loan is set as Catalyst has mentioned. You can go with your existing bank or another bank. Keeping it with your existing bank can be cheaper if you're on a pro pack and possibly can get additional discounts for higher volume of loans.
If you are in a pro pack, then generally there should be no additional application fees and the loans should be covered by the single annual fee. If you're on a basic package then switching to a pro pack is a fairly simple and inexpensive exercise (depending on the bank).
Instructing the bank that the assets are not to be cross collateralising as well doesn't hurt.
Agreed, there are big banks who are prepared to price a loan and you have better interest rate stability. If it's a lower tier lender that you haven't heard of before, just make sure you do your research to see where their funding comes from and their history.
There are too many stories of people who are seduced by a loss leading promotion to get you in only to get killed on rates at a later stage…
Agreed, there are big banks who are prepared to price a loan and you have better interest rate stability. If it's a lower tier lender that you haven't heard of before, just make sure you do your research to see where their funding comes from and their history.
There are too many stories of people who are seduced by a loss leading promotion to get you in only to get killed on rates at a later stage…
If you're in Melbourne then Select Salvage in Kensington is a good place to start. Not the cheapest but they have a good range and their stuff is mainly finished. There's also a place in Campbellfield called A&R Secondhand that is cheap and mostly straight out demolitions and unfinished.
And get in contact with a good lawyer/conveyancer to cover your own interests.
To follow on from Terry, if you were to go to a larger LVR amount (say 90%), you would release $79,500 (and pay in the vicinity of $5,000 in LMI). At 80% you'd release $42K.
However if the valuation comes in higher then you might be able to release enough equity at 80% LVR and pay no LMI.Assuming you managed to release $79.5K in equity, you could then purchase an IP for approximately $320K (at 80% LVR) or as much as $500K (at 90% LVR). This assumes you'd purchase an existing property and pay full stamp duty.
Whereas if you released $42K, your investment purchase would be limited to approx $170K (at 80%) or approx $280 (at 90%).
Hopefully they keep this new LVR policy too!
Hi Intrigue,
You're not too far wrong, most established areas in the inner city would get to perhaps a 4%+ yield, however as the value of the property increases, that yield will get you a higher return and eventually the property will be positively geared (what is sometimes referred to as a yield curve).
My thought is for the first IP go for something that might cost a little more to hold (ie lower yield) but with higher potential capital growth and then let nature take it's course for the property to break even and also get the benefit of a better wealth outcome.
To get the higher yields, then the choice is to look for a cheaper property with higher rentals (say rural areas) or for CBD property where the rental demand is high and you can command higher yields (some developers will even give you a guaranteed 7% for a period) although the capital appreciation might be sacrificed.
Feel free to come along to one of our free property investing seminars where we cover this type of condition.
ANZ just changed policy and will allow a 2% cap LMI at 95% LVR (existing credit customers only for 95%), although you have to cap all of the LMI, so it's more like 93% + cap LMI.
