Hi,
I’m living in regional Victoria for the next 18months and I am looking at buying a PPOR property and after 18months I will probably move back to Adelaide and use it as an IP. I’d be looking at also buying a second IP in Adelaide after 2-3years and live with my parents during that time.
Ideally I would want a P & I loan with the minimum interest. I’d also like the option of paying more than the required payments off the principal.
What other things should I be looking for in a lender for my situation. i.e. application fees, monthly fees, 100% morgage offset account, fortnightly payment frequencies etc…
Any advie would be greatly appreciated.
Cheers
Paul[suave2]
Hi
So you are going to move out and rent the property? In that case you will probably want to keep your loan high, and also save interest at the same time. Therefore, you should look at the merits of taking an interest only loan with a 100% offset account.
Terryw
Discover Home Loans
Parramatta
[email protected]
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Perhaps you could look at a honeymoon rate – there are some excellent 12 month honeymoon rates available at the moment – this way your interest would be low while the loan is not tax deductible. Once the 12 month honeymoon is up you can (with most lenders) switch to a different product for minimal cost so you have benefited from the honeymoon rate but also not paying a high rate afterwards.
As Terry has mentioned i would also recommend setting up an offset account as opposed to paying $$ off the mortgage so that when you turn it into an investment property you are able to claim the loan off your tax.
Hope all that makes sense.
Anita Marshall
Advanced Finance Solutions
http://www.advancefinance.com.au
[email protected]As always Terry has pointed out the benefits of an Int only loan with a 100% offset.
With some of the honeymoon products the rate of interest reverts to the standard variable rate for a period of years and if you switch loans to another product within the Banks range you are charged.
You should be able to obtain both a permanently low rate of interest together with a fee free 100% offset account.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hi guys,
Thanks for all your replies. They have been very helpful. However, reading the last response from Richard prompted another question: Other than the purposes of keeping your money more readily available with an IO loan if I have an IP that is on a P&I loan is the interest fully tax deductable?
I ask because the last response by Richard made it sound that the interest may not be fully tax deductable if I have a P&I loan on an IP??
Can you please confirm/clarify this?
Thanks
Paul[suave2]Hi Paul
If you take out an interest only loan or a P & I loan for the purposes of investment the interest is tax deductible.
The ATO apply the purpose test for the funds and not the security on which the funds have raised.
Obviously with an P & I loan the debt reduces with each repayment and therefore the amount of interest you end up paying also reduces thus reducing your Tax deductability.
If the property is currently your PPOR but could end being an IP i would suggest an Interest only loan as otherwise you will be reducing some of the Tax deductible interest you can claim when the property becomes available for rent.
Your MB should be able to structure it correctly for you both now and with your changing circumstances in the future.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Hello,
Kindly get back to me via email address stated below for further and more information.Warmest Regards,
Mr Barry Tom.Barry
Do you do home visits ?
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
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