Hey guys,
I got a $250k home loan fixed at 8%pa when the market wasn't stable.
(I also have a few small loans fixed, which I wish to move at the same time.)I now want to refinance, however, the payout fee is around $35k.
If I add this to the home loan amount ($285k) my monthly repayments with new variable rate would be less then with lower amount but higher (fixed) rate.
Even though my monthly cash flow will be improved, my borrowing amount increases (and my borrowing power decreases?).
My question is: what are the pros/cons of doing this?
At the moment it's an investment property but I am moving into it shortly, then it will become my primary residence.
I plan on living in it for 1-2 years then either selling or renting out again.
My main concern is; when I come to sell it will there be payout fees or is that when it's fixed only?
Cheers.
If its an investment property you may be able to deduct the whole of the fee in the year it is incurred. This plus other borrowing expenses and tax deductions could bring your income way down and save you a heap of tax which will take a little bit of the hurt out of it.
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
You could always look at borrowing a little bit more and prepaying interest in advance for the year as well whilst it is still an investment property.
Richard Taylor | Australia's leading private lender
Wow I didn't know that, Terry?
Where can I find out more about that? Or who can I speak to to confirm?
Scenario 2: End of May it will no longer be an investment property. What are my options and better tactics then?
Cheers
Your Accountant would be one place to start.
Richard Taylor | Australia's leading private lender
Richard and Terry – in the current economic climate, is it better to go with a bank, or is a non-bank lender just as good?
That is a difficult one to answer as each clients position is different.
Would need all of the information to make a recommendation.Richard Taylor | Australia's leading private lender
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