在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m
Longtime reader, first time poster. I've found myself in somewhat of a rut.
Partied and messed around in my early 20's borrowing big for holidays, bikes etc. 27yo just purchased my first place, took me 2 years, saved $30,000 for deposit, $320,000 still owing.
I'm living in it for 6 months to get my FHOG etc, but I'm somewhat lost as to what to do now.
The advice I've been given is to not pay down my loan (stay IO) to maximise my tax benefits and save for another deposit.
According to my lender, I'm at my maximum loan serviceability... So what now?
I find that the only way I really achieve things is by setting a big goal, and lots of little goals. (Eg, save up for a house, save $1,200 this month, etc)
I've got the house, and I want to get another, but no one can give me a goal post to aim for. How do I work out when I can borrow again/how much I will need?
I would do some quick renos on your PPOR if possible, whilst paying down mortgage asap.
As soon as you feel able to reval your place and extract enough equity, put it into a rural type investment with high yields (not effecting your serviceability much) where you can then again extract some sweat equity soon after purchase, extract equity and repeat.
Like most things though you need to find a bank (and valuer to pay ball).
Get another job and start ripping into that non-deductable debt whilst working your behind off adding value to your new purchase - you then get a reval in a year or two and go again.
The more you have the more you make (over the long term/generlisation).
Its that easy but takes sacrifice and hardwork unfortunately. Thats why you hear so much guts aching about affordability. Many people cant be bothered but will blame others for their lack of success whilst expecting a free ride.
Did you set up your home loan with a 100% offset account attached?
They are very useful as you can put all your extra money into it so your interest bill goes down but the actual loan amount stays at original amount borrowed. This is great for tax and accounting purposes down the track if you convert the house into an IP.
If you plan on living in your PPOR for six months to be safe re the FHOG I assume you will then move somewhere else and rent it out. Please check the timing because if you got the transfer fee (stamp duty) concession I think you need to live there for one year. Don't risk moving out too soon or you may have to pay the duty.
Having checked that out, I wonder what your PPOR would rent for and what you plan to do.... rent with friends, go back home????
Once you know what you will do once you have rented our your PPOR after whatever time you must stay, then you can formulate a plan. In the meantime, I agree that you should make the place as rentable as possible without spending up big and pay the debt down so you have some equity for when you do know which way to jump next.
Thanks for the advice everyone, I'll definitely go down the home reno path to add some value for rentability (bathroom & kitchen need some modernizing)
I'm going to speak to the bank today about an offset account, seems like a better option to me than paying off the loan as I want to keep the debt level at roughly where it is now for tax purposes (when I convert it to an IP / deductible debt)
brisraeli said: ↑
I've got the house, and I want to get another, but no one can give me a goal post to aim for.Click to expand...Righto.... here you go ....Goal: you have 2 years to build up $48k.
Check your progress target every month ($2k).
Look at other possible investment markets (shares, REIT, fund etc) to achieve more than 7% PA
Increase your physical exertion income (overtime, etc) by 10%
Pay down the mortgage, but do it via an offset account if you're planning to use the property as an IP in the future. Don't put your savings directly onto the loan.
Every lenders method for determining affordability is different, so you may be with a lender who is not the best for you moving forwards. Generally speaking, I've found affordability for property investors tends to be better with some of the smaller lenders instead of the big ones. Their products and pricing is comparible as well.
If all else fails, as Y-man suggests, property isn't the only good investment out there. Keep saving and spend the time researching other prospects.