- al2216wParticipant@al2216wJoin Date: 2007Post Count: 3
I need some advice regarding mortgages. My situation below.
I have recently signed a contract on a residential property. This is my first property. I currently live at home.
I plan to live in the property for 6 months to take advantage of the FHOG and then rent the property out, then go
live back at the olds. Property price 270K. Rent minimum $250 per week. I plan to borrow 80% of the value of the property
$216,000 being the loan amount. My goal is to get the mortgage down to neutral, in other words get my mortgage down to
a stage were rent covers both principal and interest. Once that is achieved, I will look at purchasing my next property. I
also plan to take advantage of negative gearing. As I am a first home buyer I have little experience with mortgage
products. After having seen a finance broker I have leaned towards a 5 year Fixed on the whole loan. The reason behind
this is the uncertainty with interest rates. My question is simply, if you were in my position what mortgage product would
you choose? Which bank? What type of loan structure?
Any opinions would really help.
Thanks.Skispy Galipsy.Member@skispy-galipsy.Join Date: 2007Post Count: 10
I would tend to hedge my bets both ways and go with a portion fixed and a portion variable. 5 years is a long time and a lot can happen then. Also the debt will be tax effective after 6 months so interest rates wont effect you as much. There are many pitfalls with setting up finance to builod a property portfolio. Make sure you ask your broker regarding cross securitization and a loan with facilities and flexability. I hope that helps.
0423 028 239propertypowerMember@propertypowerJoin Date: 2006Post Count: 312
You might want to consider interest only loan.JONCHUMember@jonchuJoin Date: 2004Post Count: 112
Congratulations on taking the first step. Fixing your rate will give you that peace of mind. However be mindful that when you fix, you have restrictions when trying to pay down the loan as you are planning. There are products that allow you to fix a part and have another portion variable, pretty much the best of both worlds like pete suggests.
In regards to the banks, I would choose one of the major banks for now.
Happy InvestingRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024
Personally I would not consider a P & I loan but an interest only loan with 100% offset Account attached to it.
The loan could be split between Fixed and variable and the offset account attached to variable portion.
There are a few suitable products that would achieve what you are after.
Richard Taylor | Australia's leading private lenderal2216wParticipant@al2216wJoin Date: 2007Post Count: 3
Thanks for the suggestions.
I will be seeing my broker again soon.
I will see what his opinion is on taking
$150,000 on a fixed 3 or 5 years and,
$66,000 on a variable with a 100% offset account attached.
This seems sort of what you guys are recommending. Plus Peter G makes a good point saying "the debt will be tax effective after 6 months" which is important to consider given that it will be an Investment property.