All Topics / Help Needed! / looking at IP number 2 and stuck

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  • Profile photo of 2earlyor2L82earlyor2L8
    Participant
    @2earlyor2l8
    Join Date: 2012
    Post Count: 7
    August 22, 2012 - 10:48 am

    G'day,

    Bit of background, I've self managed my first ip for 5yrs (not too well after what I've read on here), it's been on a p&i loan and been running at a loss.

    I am now looking at buying my 2nd ip using a 90 percent equity loan. As I have no savings.

    After reviewing the forum it seems I would be best to put both ip's on io loans with offset accounts, would this be right?

    Thanks. 

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539
    August 22, 2012 - 11:25 am

    Hi there

    Definitely interest only loan with offset, yes.  Each year you put the rent up and at some point the rent covers all the costs and mortgage and there is a surplus.  At this point you could opt to use that surplus money to supplement your own cost of living, or to start paying off the principal of the IPs.  Why bother paying off the principal now with your own money when you can pay it later with tenant money :)

    When you are on a P&I loan, your payments are higher each month which makes your holding costs higher than they need to be.

    Interest only for sure.

    Contact Jamie M or Richard Taylor (userid Qlds007) who are both contributors on these forums and are both brokers held in very high regard that could set you on the correct track with the correct refinancing methods to move forward. 

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of 2earlyor2L82earlyor2L8
    Participant
    @2earlyor2l8
    Join Date: 2012
    Post Count: 7
    August 22, 2012 - 11:34 am

    Thanks JacM. :)

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    August 22, 2012 - 1:03 pm

    Thanks for the kind words Jac M :)

    2earlyor2L8 – do you have any non-deductible debt like an owner occupied property, personal loan, credit cards, car loan, etc?

    If so, you really want to knock this debt on the head first.

    If you don't have an owner occupied property right now, are you planning on purchasing one in the future?

    All in all, IO with offset is usually the ideal structure (keep in mind that it's not usually necessary to have multiple offset accounts – one will do the trick. If you've got a PPOR, link it to that loan).

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of PISTOREPISTORE
    Member
    @pistore
    Join Date: 2012
    Post Count: 75
    August 27, 2012 - 1:10 pm

    Probably need more info to make any real comment, but  when buying your second property, just make sure you get your numbers sorted first to suit your lifestyle, so your cash flow is balanced. The only way to keep moving forward is to keep your cash flow strong.

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