I have bought and built recently,It is in a good area and between the banks and real estate valuations it has been valued at about $100,000 –$120,000,above what we OWE,NOW here is the question(I have paralysis analysis from reading too many books) I should buy an investment property? in my own name or someone else's? positive cash flow? staying away from units and townhouses,between the value of $1 to$220,000???????? I love any help quesries
If you have done well on building, why not just build another?
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
Don't forget that you won't be able to access all that equity.
Unless you go for a very high LVR LOC on your PPoR – 95% (which I personally believe is very risky; your house is on the line), then in normal circumstances the Banks will only allow you to use 80% of your PPoR's value for re-borrowing, minus any existing loans.
So that means, say for example your new house cost you $350k, and now it is worth $470k (based on the new valuation),you can use $376k for investing.
But ,you still owe say $300k. You can only use $76k for your next deposit and closing costs.
I would never leverage your PPoR more than 80%. Life happens, and you wouldn't want to have to sell your house in a hurry, and take a loss. Better to be able to sell the IP and keep the PPoR.
Guys,
Cheers for your help as for building again too much of a headache and quite honestly wrong time now we were lucky in our timing with this first one,As the next response what is PPOR? This is the first Question I should ask before investing? and your right we Owe above $350k and is valued anywhere (by bank and real estate paper evaluation,)from $480,000-$500,000 so where does this get us? in calculations how do I work out how much I need to borrow without going over the 80% LVR,LEVERAGING ECT,What do we need to aim for? figures figures figures show me if you could???Many thanks
If your house is worth $500,000 just times this by 80% and minus your existing loan. This will give you the amount of usable equity without having to pay stamp duty.
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
Hi Damien,
In response to your question PPOR stands for; Principal Place Of Residence. e.g .Owner Occupied.
Here's a couple of things you should take into consideration. As discussed in earlier post's LVR has to be considered. But the other fundamental that you have to take into consideration is serviceability. If you already owe above $350k you'll have to be earning a healthy income to borrow the same. You might want to work out how much money per week your prepared to commit to another mortgage, without sacrificing lifestyle too much.
Have you considered paying some of that owner occupied debt first, because there's no tax deductions for personal debt. As your aware taking 30 years to pay back a loan you'll be paying up to 3 times the initial loan amount back to the bank.
Kind regards,
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