Hi all,
Based on the fantastic advice i read in the post "IP – have we left it too long" i have decided to give you my 'numbers' to get some advice
So here we are, i am 24 earning $69000 a year.
My husband is 30 – earning $64000 a yearWe bought our house 2 years ago – owe = $360k, worth $400k – have $7000 in redraw availability
$15k in savings
Owe $32000 on my husbands car – WE REGRET THIS DECISION NOW – we bought it 2 months agoI have a lease car through work and this leads me to a question… am i liable for the complete lease costs over the 4 years or just the repayments – i mean this in regards to calculating our ability to borrow. How will this affect us? The complete lease payments fully maintained are $15000 a year. Just the car payments are $10k a year
We have spoken to a mortgage broker, we are currently sitting at 90% LVR roughly so cannot access any equity to get an IP but can use our parents (husbands parents) as guarantors to unlock that equity – which leads me to another question, should we do this to get started? I would like to, they have no debt at all and $1.5 mil of property.
We are looking at 1 x $100k positive cash flow property currently – we have been told we can borrow 95% for an investment property and add the mortgage insurance to the loan – so we would need $8000 up front to purchase this (without using guarantor)
I await your comments eagerly.
THANKS!
Not sure who suggest the 95% loan but if it was your mortgage broker i would be steering well clear.
You are better off borrowing 100% plus costs on your IP and using the extra funds to pay down your PPOR.
Personally I would get your parents to take out a separate loan pay down your PPOR with these funds and then split your home loan to fund your deposit.
You can then pay down the balance on their loan as qucikly as possible without effecting the deductability of the loan interest.
Also means they are free to use their security for their own means rather than wait forever and a day for you IP to go up in value.Richard Taylor | Australia's leading private lender
Tell me more about the parents getting a loan to 'pay down' the PPOr. what do you mean to pay down? pay the whole loan?
i am new to this so will need laymans termsAssume the purchase price of the new IP is $300,000 and purchase costs come to $15,000.
You parents take out a loan of $75,000 and use this to pay down your PPOR.
In turn you then apply for a new interest only loan on your PPOR of $75,000.
(You turn your currently PPOR loan to interest only with 100% offset account to free up monthly cash flow.)
You use this $75,000 on your new IP to cover the 20% deposit and the acqusition costs.
You then take out a loan for $240,000 being 80% of the new purchase price.
Purpose of the loans are for investment so the interest on both loans are deductible.
You pay down your parents loan as quickly as possible.
This way 100% plus of the interest charged on the new IP is deductible and your parents property is used merely for the 20% loan plus costs (Yes some family guarantee loans can be structured this way).
You parents have the flexibility that they can reborrow against the property to fund their own investments.
As mentioned doenst sound like your first mortgage broker had any clue about investing structures so make sure your next one has some experience.
Richard Taylor | Australia's leading private lender
Thanks so much.
i am beginning to think i need a new broker. i am in the penrith area in sydney if anyone can recommend one?
Hi, you might also want to look at your PAYG. You're in a high % tax area.
Ideally, one of you should be in the low income category [lots of freebies if your taxable income <30K]
Deductible interest is one way of lowering the taxable income, depreciation is another & super is another. Paying to dependents eg minors is yet another way of lowering taxable income.
of course, your serviceability may be impacted. So lots of factors to look at. Bottom line is they all increase your net worth which is what will give you your financial independence.
KY
Thanks. just spoke with my bank and i am really optismistic now that i could be buying my first IP in the next few weeks
EXCITED!!!
Just gotta pick a Regional NSW town – possibly Forbes. Yes i am doing my research everyone
I am thinking 1 x buy and hold at 7.5% ROI
and 1 x buy and reno and sell – A bit closer to home.PUMPED! bring on financial freedom and happiness and the ability to raise a guide dog and volunteer at my local food shelter! Giving back is important
Isnt it funny how things can change in 1 day.
Got our house valued today – $430k, owe $362k…
Getting closer to unlocking the equity…. seeing the accountant next week…
Time to bite the bullet
You must be logged in to reply to this topic. If you don't have an account, you can register here.
