me and my partner are about to purchase our 1st ppor, its a townhouse and is a fixed price of $440K, we have about 130k saved, whats our best plan of attack in regards to our loan etc.
Hi Dellas,
What your investment strategy for the next 5-7 years (if any)?
Do you plan to purchase another IP? Do you plan to renovate? Are you planning to start a family? Do you have stability or instability in both your employments?
Regards
Shahin
TheFinanceShop | Elite Property Finance
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the townhouse is being built at the moment, dont plan on kids for another 4-5yrs, im on avg wage my partner is about to graduate early next year (shes an architect)
would like to purchase an IP maybe in a few years time, is it best to puit all our money onto our PPOR loan etc
there is never a fixed price everything is negotiable
Fixed rates are currently very attractive – there is no denying that. I lot of people who have a lot of debt are fixing at least a portion of their loans. Also from a risk mitigation perspective it may be a good strategy particularly for those with high debt levels and/or instable work arrangements. The flip side is that you lose a lot of flexibility. The PPOR debt is 'bad debt' i.e. it is not tax deductible. So you want to pay this off as soon as practically possible.
If you jump into a fixed loan then there is a limit to what you can repay in a year. You need to get specific advise but you may need to consider fixing a portion of the loan to give you stability that the repayments are going to be a certain amount and to help with risk mitigation and then have a portion of your loan as Interest Only with a linked offset so any excess funds can be accumulated in the offset loan. The other benefit of this is that you can accumulate the funds in the offset to help facilitate the purchase of an IP in later years.
TheFinanceShop | Elite Property Finance
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Email Me | Phone MeResidential and Commercial Brokerage
Be careful about paying off your PPOR debt as quickly as possible.
I see way too many clients who aim to achieve this – and then decide that they want to covert their PPOR into an IP but have paid down a massive chunk of their mortgage.
So what's wrong with this? In short, when their current property turns into an IP, the loan against this property is generally quite small (as they've paid down a considerable amount of the principle) – which means they can only claim a small amount of interest.
Careful planning will get around this.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
we r planning to live in it for at least 5-7yrs prob even 10yrs?
Consider asset protection now before doing anything. Which names on title, how it is funded, ways to protect your cash deposit etc.
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
In addition to the great advise above.-
When buying newly built properties check the price. They can often be over priced. Investoprs like them becvause they get good depreciation but this doesn't apply to you.
Look in the area for similar sized units that are 5-10 years old./ How much more expensive is yours. Because in 7-10 years time you are competing with them when you need to sell. Sometimes new is not better.
Without full information it is difficult to comment with a degree of accuracy but either way i think i would be looking for an 80% interest only loan with a 100% offset account.
This will give you choice and options down the track as well as flexibility.
Certainly think of a couple of lenders who would appear to meet these requirements.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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