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
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?
hey,
everything is IO. figures are correct. House is 4/2/2 in Narangba QLD. Land is 400m2
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
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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?
thanks guys
I am thinking to put money to offset account # 2 to reduce negative gearing on Brisbane house.
which of your IPs has the highest interest rate? that is where ALL your offset money should go.
Jacqui Middleton | Middleton Buyers Advocates
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Thanks guys,
The highest is Brisbane one – locked for 3 years ( 2.5 left) @ 5.89
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
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Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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
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
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Take the $20K and put it all on black.
hmhm true, because it's cross-collateralised it is ONE BIG LOAN isn't it? and both loans have same interest rate
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
DEVILZ wrote:hmhm true, because it's cross-collateralised it is ONE BIG LOAN isn't it? and both loans have same interest rateNot 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
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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%)
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
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