- NEWGENParticipant@newgenJoin Date: 2004Post Count: 151
My wife and I have been racking our brains working with our current broker to see if we can afford to upgrade our PPOR. He has been good so far but I think we're at a stage where we need to speak to someone with a bit more experience, knowledge of products, and creative methods of investing (there's more than one way to skin a cat). I'll outline in detail our situation below, but ideally we're wanting to speak to a broke in Sydney in person to look at our options (if we have any!).
Here are the details of our current situation (please bear in mind we're newlyweds and just spent a heck of a lot of money on our wedding and 2 month long honeymoon….. which has set us back quite a bit).
Combined total pre-tax income (excluding super)
Salaries: $156,000 p.a.
NET rental income: $10,000 p.a.
PPOR: $106,000 (recent bank valuation – $245,000. Pretty much on par with market prices).
Investment Property: $295,000 (recent bank valuation – $400,000. Even taking the banks being conservative into consideration, it's still about $40-50k off the mark).
Additional residential loans: $105,000 (previously taken for renovations etc)
Credit cards: $50,000 (this figure includes the LIMITS of our credit cards which aren't maxed out).
All of our residential loans minus $40,000 are fixed at 6.69%
The $40,000 loan is fixed at 7.44%, all are with St. George.
We have confirmed the break costs for ALL of our residential loans and the total comes to $9,000 (in case we need to change lenders or restructure the loan in any way).
We are wanting to sell our PPOR and upgrade. We should realistically get $250,000 for it quite easily. Selling our investment property is not something we want to do unfortunately as it is a great investment in a prime location in a great suburb. Due to the excessive personal and credit card debt we know that it has put us back quite a bit and worsened our situation. I'm thinking maybe even looking at keeping the two existing properties and buying a cheaper 3rd property might be an option? We don't want to pay LMI but understand that this is probably unavoidable.
I hope the information I've provided is sufficient. If anyone has any suggestions or advice it'd be very much appreciated. And if you are a mortgage broker in Sydney who can meet up with us to discuss our situation in more detail that'd be great.. please send me a private message.
Thanks in advance.
NEWGEN.ducksterParticipant@ducksterJoin Date: 2004Post Count: 1,674
When you have debt that is from bad debt (assets do not increase) you need to pay it off quickly
which I am assuming is a personal loan and credit card debt at a higher interest rate that is not tax deductible either.
This bad debt will lower how much you can borrow for a home.
Also credit card limits of $50,000 go against how much you can borrow even if you had it paid off.
Why do you want to upgrade can you put it off until you pay off your credit cards and personal loans.
You might need to consider consolidating these debts to the ppor loan to lower the interest rate and pay them off ASAP. Or take out a line of credit loan on one of the investment properties as a separate loan to get the high interest credit card and personal loan debt into a lower separate line of credit loan and pay it off asap. But stop spending money on these personal and credit card loans.
Ask the mortgage broker if this is possible.