Hi
Considering buying our first IP (see Real Estate forum)… been reading a lot on here and it seems most peoples financial lives are considerably more complicated than ours! Strangely, this has me worried that we should be seeing a Financial Advisor.
PPoR Value: $650-$700K
Current Mortgage: $460K @4.75% variable
Savings: $140K (currently offset against above)Combined income is $140K and we want to buy an IP to get our cash working harder for the future.
In our situation, is it simply a case of taking $50K from our offset account and using that as a deposit for an IP? Or what amount we should think about investing…? Am interested to hear the thoughts of seasoned investors, but would like to keep things as simple as possible.
Am happy to seek out financial advise if its suitable but dont want to pay out for something that a) I can learn myself, and b) turns out to be quite straight-forward.
Thanks for your input!
im not sure how much knowledge u have with financial matters – that would alter your reliance on other sources. but as for me, im a stay-at-home-mum who has had no history with investing or even really planning for my financial future. so i had very limited knowledge and it made complete sence to go see a financial planner. I knew where I wanted to be, what goals I had. But I had no idea about the best way to get there was. so it was worth the money in my case
for me i wanted more than "you go invest this much money", i wanted someone to look over every aspect of my finances – superannuation, savings, IP, whether i should get into the stockmarket, my insurances etc. so i feel much more secure and knowledgable now
and with 2 kids aged two and four, i have limited time to do my own research. i still do, but not to the standard of being able to make my own educated financial decisions without the guidance of an expert.
you have a great amount of equity and savings to get u starting with investing in property – so good luck whatever course u choose
Thanks Karen… hadn’t thought of it like that – we have Super all over the place and pensions in the UK which need bringing over so maybe it might be a good time to get a financial ‘health check’ from someone in the know.
I also just phoned my mortgage broker and even he educated me in the short time we spoke… basically it sounds like i’d be better keeping my $50K offset against my PPoR and get a 100% loan against the IP. Seems so simple now, tsch!
More thoughts welcome…
Hi Samblers
Good to see we have another Pom on the forum so i am not outnumbered by the locals.
Hate to say it is as easy as using your $50K as deposit for an IP and borrowing the balance especially if you intend to make this acqusition tax effective and structure the loans correctly.
I am certainly not putting down your mortgage broker who is probably a very nice person but if they havent experience in having investor clients or is not a Financial adviser the advice you are given could end up cost you a lot more in the long run.
Depending on the type of property you purchase would initially determine the entity you would use whether it be a Discretionary Family Trust or individual names, joint tenants / tenants in common.
Then you need to see the structure of the debt and whether you are prepared to have the loans cross collateralised.
Personally I would do this as a last resort and you can read my previous comments on loan crossing.
As i say it is fairly straight forward if you know what you are doing but they tell me the same about brain surgery and I would never attempt that myself.
Richard Taylor | Australia's leading private lender
Get some advice from a mortgage broker and a tax expert.
Taking the deposit from your offset account is not the ideal way to proceed.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
As Terry has pointed out you need advice however just remember your mortgage broker unless she is a licensed financial planner is unable to give advice about the offset account.
Richard Taylor | Australia's leading private lender
Thanks guys
I have been advised that the way to proceed is to leave the deposit money where it is and buy the IP with 100% loan – take a loan for 80% of the IP with a new lender and get the balance 20% with our current bank, secured against our PPoR.
This makes sense to me…. what about to you?
My wife earns more than me and pays more tax than me, so we think it would be better to put the property in her name?
Cheers, Sam
Sam
Yes, that is the way to do it. Set up a separate loan securred against the PPOR and drwan down on this for the 20% deposit and other costs.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks
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