Hi all plenty of chat about this but I would appreciate some feedback.
Current structure
1 investment property valued 460k Loan 207k interest only rent at 410pw
Managed funds loan 161k linked to above account interest only
Total loans on above property 368k, all structured seperately as investment.
Currently building a new IP, loan when finished 305k, valuation will be around 430k when completed and rent 370 pw
Have a small LOC 50k which I use as a transaction account for all rent incomings along with income etc, and I can use this for future investments, it will have a zero balance June 2013
I would like to keep the managed funds as I like to keep the liquidity etc, but can liquidate some if required.
Income is around the 180k mark and my wife dosent work.
We are currently renting and I would like to either buy another rental or purchase another property as a PPOR, but I am unsure of the best options, now that I have started the investment train it may be worthwhile continuing.
I have no other debts, but understand LVR is getting on the higher end of the scale.
The above 2 investments are in my name only. Currently bank with CBA and more than happy. 5.85 interest only on all above loans
I have no issues with debt level to achieve financial freedom
Appreciate any comments
Cheers
CBA hasn't got the best offset account in that it is not fully transactionally but nevertheless is there a reason why you are not setting up an offset linked to your IP and having the deposit whether it be rent or salary going into the account? That way you are paying less interest. Also you can do a bit better than 5.85% with the above loan amounts. Call CBA and ask to speak to the discharges area and advise them that ING is offerring 5.63%. CBA and NAB do a pretty good job and retention and keeping customers so it may save a few dollars.Also make sure that you keep the loan facilities separate.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Thanks Shahin,
Getting the LOC back to zero is my main priority so I can utilize this facility for future deposits/ fees etc.
Its just easier to have all transactions such as insurances, income,rates etc come out of the one account and the LOC is the best option for me as I like to use the KISS, keep it simple stupid method. LOC is at 6%.
All of the other loans are stand alone, investment, managed funds, and soon to be completed IP.
Would the CBA still drop the rate even though I have taken the wealth package?
Cheers
Havinfun wrote:Would the CBA still drop the rate even though I have taken the wealth package?
Cheers
Yep – prob have a better chance under the package.
The MISA isn't too bad. It's not quite a normal offset but it's easy enough to get around the little quirks. I used one for years without too much hassle.
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]
Wife doesn't work and the managed funds are in your name? Does wife have an income?
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
Terry,
My wife has no income, I am currently looking at swapping the funds into my name only.
Regards
Terry,
My wife has no income, I am currently looking at swapping the funds into my name only.
Regards
I don't have complete visibility over the cashflow side of things but why not have the fees and outgoings coming out of the transactional account? I am not a huge fan of LOCs. For IP purchases I personally set up a separate variable loan with a linked offset. So there is a loan amount but all the funds are in the offset meaning no interest is payable unless you of course use it for the deposit of a new IP. You pay less interest and it helps a bit with your servicing if things are tight.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Havinfun wrote:Terry,My wife has no income, I am currently looking at swapping the funds into my name only.
Regards
If the
wife has not income then she could potentially earn up to $20,400 pa and not pay tax. Why not invest in the managed funds in her name? Franking credits from direct shares would also be very beneficial if she owned the shares too.
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
Terry,
Agreed on the income for the wife, as the major breadwinner are we not better off having the interest deductions in my name, thus reducing my taxable income?
Keeping the emotion out of investing the managed funds have not performed that well over the last 5 years, so I am dollar cost averaging additonal funds into the managed fund so that I may have some benefit out of it in a few years.
I have also looked at offloading the funds,maybe not all but thus improving my LVR and buying either another IP or PPOR.
I would take a small hit but would certainly make some gains down the track with more real estate.
The more I invest and the older I get I believe that real estate is the only tried and true investment model.
In my experience the income generated from housing seems to far outway managed funds etc, although in fairness the GFC has been a contributing factor in the returns of the managed funds.
Havinfun wrote:Terry,Agreed on the income for the wife, as the major breadwinner are we not better off having the interest deductions in my name, thus reducing my taxable income?
Keeping the emotion out of investing the managed funds have not performed that well over the last 5 years, so I am dollar cost averaging additonal funds into the managed fund so that I may have some benefit out of it in a few years.
I have also looked at offloading the funds,maybe not all but thus improving my LVR and buying either another IP or PPOR.
I would take a small hit but would certainly make some gains down the track with more real estate.
The more I invest and the older I get I believe that real estate is the only tried and true investment model.
In my experience the income generated from housing seems to far outway managed funds etc, although in fairness the GFC has been a contributing factor in the returns of the managed funds.
It would only be better to have the funds in your name if you were making a loss. Dollar cost averaging is just a way spruikers justify buying under performing share.
What if you sold the shares now, copped the capital loss and then onlent the money from the LOC to your wife who then buys back the shares. She would then have all future gains and income. If the income is less than the interest then you would have to consider is it really worth holding these shares?
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
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