All Topics / Help Needed! / Strategy needed

Viewing 18 posts - 1 through 18 (of 18 total)
  • Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    Hi again,

    I would like to hear your thoughts about my issue that I raised before but it changed little bit now:

    I am looking for right structure and strategy here. ( I am not fan of Negative gearing even I am on $ 100K +)

    I have 2 IP:

    # 1 – 1 year old Unit with 170 K debt IO + offset with 20 K ( Never valued but around $320 K) Rent is $500/week

    # 2 – New House with $447 K debt IO + offset with $0. (Never valued) Split $400K fixed for 3 years and $47 K variable. Rent is $410/week.

    So far what I know: that I am stuck with these 2 for a while( cross – coll, bad structure, etc)

    What should i do:

    • keep renting and put money on # 1 offset account ? ( to get more CF)
    • keep renting and put money on # 2 offset account? (to reduce negative gearing)
    • buy new PPOR ( Mackay) ~ $400K ?
    • —-insert your idea


      :)

    Any ideas and explanations are welcome.

    Thank you

    Profile photo of theycallmeBrucetheycallmeBruce
    Participant
    @theycallmebruce
    Join Date: 2012
    Post Count: 12

    Hi Devilz, can you tell us a bit more about the house, are you getting the max rent, does it have a backyard that is subdividable? And suburb? Being new I guess you are enjoying the benefits of depreciation, but it still eating your cashflow is it IO or PI? I am guessing mortgage on $447k should be $2700 per month, vs rent 410×52/12 =1780 per month so kind of negative territory, are those figures correct?

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    hey,

    everything is IO. figures are correct. House is 4/2/2 in Narangba QLD. Land is 400m2

    Profile photo of Nigel KibelNigel Kibel
    Participant
    @nigel-kibel
    Join Date: 2005
    Post Count: 1,425

    Another is to get directly involved in a development project. If you are working with the right people there can be a lot of advantages. However it is always important to do your due diligence carefully

    Nigel Kibel | Property Know How
    http://propertyknowhow.com.au
    Email Me | Phone Me

    We have just launched a new website join our membership today

    Profile photo of HomeLoanExpertsHomeLoanExperts
    Participant
    @homeloanexperts
    Join Date: 2007
    Post Count: 43

    As a general rule pay off any non-tax deductible debt first. I'm assuming you don't have any of this since you have $20k in offset.

    Then pay off your most expensive debt. So if one of the loans has a higher rate then this would be the one that you offset with your funds.

    Buying a PPOR is a personal decision. Of course you need to think about it from a financial point of view, the majority of the decision should be based on your needs / your lifestyle. After all that's what matters right?  cool

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    thanks guys

    I am thinking to put money to offset account # 2 to reduce negative gearing on Brisbane house.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    which of your IPs has the highest interest rate?  that is where ALL your offset money should go.

    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 DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    Thanks guys,

    The highest is Brisbane one – locked for 3 years ( 2.5 left) @ 5.89

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    oh ok, well if it is locked in, money in the offset account won't do you any good.  unless you  have some miraculous mortgage that allows you to offset a fixed rate loan?

    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 DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    as I stated from the start there is a Split IO loan:  $400 K locked and $47 K variable with offset so I can put money there.

    but $47 K loan and Unit loan $170 K they have same interest rate @ 5.79

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    DEVILZ wrote:
    as I stated from the start there is a Split IO loan:  $400 K locked and $47 K variable with offset so I can put money there.

    but $47 K loan and Unit loan $170 K they have same interest rate @ 5.79

    If the owners of both properties are the same then it doesn't matter which offset you use as the effect will be the same.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of PLCPLC
    Participant
    @plc
    Join Date: 2012
    Post Count: 400

    In that case, it doesn't matter which loan is linked to the offset account, as overall the interest paid (and saved) is the same.

    Edit: Terry beat me to it above.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
    Email Me | Phone Me

    Melbourne based Mortgage Broker | Making Finance Simple

    Profile photo of Scott No MatesScott No Mates
    Participant
    @scott-no-mates
    Join Date: 2005
    Post Count: 3,856

    Take the $20K and put it all on black.

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    hmhm true, because it's cross-collateralised it is ONE BIG LOAN isn't it? and both loans have same interest rate

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33
    Scott No Mates wrote:
    Take the $20K and put it all on black.

    no wonder you have no mates Scott with these kind of advises lol

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    DEVILZ wrote:
    hmhm true, because it's cross-collateralised it is ONE BIG LOAN isn't it? and both loans have same interest rate

    Not its not – or I hope it is not. You can have separate loans but still cross collateralised. (crossing is a bad thing!)

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of DEVILZDEVILZ
    Participant
    @devilz
    Join Date: 2012
    Post Count: 33

    I know it is bad ( I made enough mistakes to understand that) that's why I am here to learn basics and fix it.

    My loans are separate but with one bank and cross-collateralised.

    Correct me if I am wrong: if you are with one bank and your loans are x-coll BANK see them as one big loan. (like in my case: IP #1 is around $320K and debt is $170K so LVR is ~ 55% and IP# 2 is around $450K and debt is $447K so LVR ~ 100% where BANK see them as one big loan with LVR ~ 75%)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Devilz

    Yes hate to say you are right.

    The properties are cross collateralised and not ideal for going forward in regards to your investing future.

    Of course with a fixed rate your choices are limited.

    Would have suggested a fixed rate with 100% offset account but of course easy to wise after the event.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

Viewing 18 posts - 1 through 18 (of 18 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.