All Topics / Finance / finance for first IP n timing

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  • Profile photo of investhutinvesthut
    Member
    @investhut
    Join Date: 2007
    Post Count: 73
    September 19, 2012 - 11:19 am

    Hi All,

    I have just moved into our home/prop.

    purchased for 435k and 15k stamp duty, have mortgage for about 140k and remaining in offset account.

    i earn 100k a year and wife in parttime maybe making 25k year or something.

    what would be best way to finance my first IP or am I trying to do it too soon.

    dont want to cross collateralise , thats all i know

    Regards,

    Investhut

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    September 19, 2012 - 11:28 am

    Hi Investhut

    Without knowing the finer details of your situation I'd tap into the equity against your PPOR by setting up a second interest only loan. This loan will act as the deposit/costs on your IP. I'd then set up another, separate interest only loan to cover the remaining balance of the IP.

    So you'd have three loans set up:

    Loan 1: Current PPOR loan

    Loan 2: Equity release against PPOR to cover 20% deposit plus costs on IP

    Loan 3: Remaining 80% for the IP

    With loan 2, if you're considering purchasing more than one IP in the future than I'd be inclined to tap into more equity now.

    Avoid using the cash in the offset – the borrowed funds will mean the entire IP debt is deductible.

    Hope that helps.

    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 TheFinanceShopTheFinanceShop
    Participant
    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271
    September 19, 2012 - 11:30 am

    G'Day Investhut,

    You draw upon on the equity from your existing PPOR. You can either draw up to 80% LVR or 90% but you of course pay LMI. 

    Lets take 80% – you have $348k in equity. Minus the existing mortgage of $140k, that leaves you with $208k to use as a deposit for the next IP purchase. Make sure the facility is a standalone facility so that the interest of PPOR is not contamanted with the interest of the IP. 

    Depending on your future investment strategy (even beyond the next IP) it may be best to go onto an interest only loan with a linked transactional (or non transaction) offset. 

    What's your budget and when you are looking to purchase?

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544
    September 19, 2012 - 12:20 pm
    investhut wrote:
      am I trying to do it too soon.

     

    When to go (or go again) is not so much an issue of time moreso it is an issue of finance and from a financial perspective you look well placed to start your investment journey.

    Before you make a leap make sure you spend some time trying to work out what you are trying to achieve as this will guide many of your property decisions.

    All the best on your journey.

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