Which way to go?

Viewing 5 posts - 1 through 5 (of 5 total)

trigger22
Member
@trigger22
Join Date: 2008
Post Count: 3
September 5, 2008 - 8:15 am
Hi Everyone,
Just after your opion on my situation, regarding what you would do. What would be the best option.
Im 25 years old. I brought my first house 2 years ago by myself and live in it. I have $165,000 remaining on my loan. The house im saying would be worth $250,00-270,00. I've done alot of renovations to it. Im currently paying extra off on the loan and my weekly payments are $400.00 I cant decide on what to do next. Either i increase my repayments to $500 a week and focus as hard as i can to reduce my loan even more or look at purchasing a investment property at around $180,000- $200,000. Just wondering if you were in my shoes, what way you would go? Reduce the loan first then purchase an investment property down the track or am I in a postion to purchase now and still survive?
(i only have my wage to live off and pay the loan off, i brought the house by myself)
Thanks..
mackar
Member
@mackar
Join Date: 2006
Post Count: 106
September 7, 2008 - 5:17 am
hi trig,
I would research where I could buy an investment property to see what property forecasters are
commentating on future growth potential before doing anything!!!.. if like in Adelaide or SEQ they are estimating
25% growth between now & 2011 I would certainly look at it, as potentially a capital gain like that could in essence pay off half your loan $60-75,000 (forgetting about CGT at moment as that can be minimalised dependant on your capacity to write down tax).
If you find out there is not much hope of capital gain in your area for next 3-5 years I would pay down on my mortgage & by doing so prepare yourself for when the time is right for you to jump in prior to growth…
but I would also organise a line of credit in the meantime to maximise interest savings.
Wendy Chamberlain
Participant
@moorew
Join Date: 2003
Post Count: 58
September 10, 2008 - 7:29 am
Hi Trigger22,
Potentially, you can do both. You've built up some equity in your PPoR that you could utilise via setting up a line of credit. You can then continue to pay down your PPoR loan (non deductible debt) whilst utilising the equity funds for investing purposes.
Just make sure you get the whole thing property structured so as not to mix up the two sets of funds, as the government is very strict with what you can and cannot claim. Keep it all separate. Speak to a good finance broker first to sort it out for you.
Wendy
http://www.realestatewomen.com.au
Wendy Chamberlain | Chamberlain Property Advocates
https://www.wendychamberlain.com.au
Email Me | Phone Me
Melbourne Buyers Agent & Sellers Advocate | Independent | Flat Fee
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
September 10, 2008 - 7:54 pm
Personally I would look to do both however i would be careful how i structured it.
Unless your current PPOR is likely to be your home forever i certainly wouldnt be paying off the capital as quickly as possible and in fact would be switching the loan to interest only linking this to a 100% offset account.
Then careful planning the loan to ensure that your home and new IP are not cross collateralised.
The way in which you set the loan up will not only give you the same interest saving as a Principal & interest reduction but also provide flexibility in case down the track you decide to rent out the property and buy another PPOR.
Definately make sure your mortgage broker is au fait with investment structures.
Richard Taylor | Australia's leading private lender
Carl.Alexander
Participant
@carl.alexander
Join Date: 2006
Post Count: 50
September 11, 2008 - 2:59 am
trigger22 wrote:
Hi Everyone,
Just after your opion on my situation, regarding what you would do. What would be the best option.
Im 25 years old. I brought my first house 2 years ago by myself and live in it. I have $165,000 remaining on my loan. The house im saying would be worth $250,00-270,00. I've done alot of renovations to it. Im currently paying extra off on the loan and my weekly payments are $400.00 I cant decide on what to do next. Either i increase my repayments to $500 a week and focus as hard as i can to reduce my loan even more or look at purchasing a investment property at around $180,000- $200,000. Just wondering if you were in my shoes, what way you would go? Reduce the loan first then purchase an investment property down the track or am I in a postion to purchase now and still survive?
(i only have my wage to live off and pay the loan off, i brought the house by myself)
Thanks..
Go Travellng