澳洲Australia property In accumulation phase and upgrading PPOR


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


Hi all. I assume the following has happened to others.

I am in the accumulation phase with small loan on my PPOR but 90% LVR when including my two IP,s. (equity loan )
The third soon to be built should have around 70-80% LVR.

Now my IPs are in central town and my medium term goal is to buy a PPOR in this area.
Now problem is I'm finding great potential properties that I would love to start my family in( 4 months to go). Issue is I can't upgrade because all equity is tied to IPs
So what do you do. Stay the path get some growth in your properties and upgrade later.
Do you sell an ip before a growth phase to raise the funds to jump earlier ???
I'm very interested in what people during accumulation/ high LVR have done when a PPOR upgrade has tempted them.  

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You should just do the sums.

You have to factor in CGT and other expenses with selling and then the extra interest you would have to pay if you didn't sell but borrowed more to buy.  

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Terryw said: ↑
You should just do the sums.

You have to factor in CGT and other expenses with selling and then the extra interest you would have to pay if you didn't sell but borrowed more to buy.Click to expand...
My main issue is I pulled all equity from my PPOR to purchase IPs and fund my development. When I sell these loans need new security which they would get with the new property. But the buying/selling costs eat into my funds increasing my LVR above what I believe the bank would be happy with.
My guess is I must either.
1# inject cash.( I can but it's my buffer so no)
2# find new security for loans( not an option yet)
3# sell new ip and use cash to lower LVR(regrettable step in the future I feel)

I should probably just stay on my chosen path. Wait for growth then rethink.
I could move into one of my IPs if I really wanted to live in the CBD
I guess this is just a little trap of using all your available equity.
Upgrades are off the table unless you inject cash from somewhere else.  

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devo

I don't know your exact loan structure and CGT implicaions but is selling your current PPOR an option?

It doesn't look like you have a lot of options so think about this mate.
Yields have picked up a lot in your area but are still low IMO and are much lower as you go up in property price range so if I were you I'd be tempted to rent and nice place for myself.

Renting makes sense and particularly so when you want to speed up your wealth acelleration. The only problem with renting is that you'd miss out on the CGtax free status of a PPOR but in your case, renting won't dissadvantage you because you still have your old PPOR and the 6 year rule would apply.

cheers  

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i faced this issue a few months back, found a block of land that we could build the nice new family home on...keeping all IP's and gettiing the new PPOR was the option that i wanted to do...but it would have put a bit of a strain on the finances.
in the end...made the decision to sell 1 IP, which we did...i didnt look on it as a backward step, as the new PPOR is worth about 50% more than the IP we sold.
this put us in a position where we have now created a larger total asset base with no increase in out of pocket expenses month to month (we reduced some other non deuctible debt also) and the wife is happy with the new family home.
it was a big decision for me to sell an IP as i have always followed the buy and never sell mindset. looking back on the decision....it was the best thing to do for our overall "plan", its not all just about the best $ returns....there is family, happiness, enjoying the moment that need to be factored into the equation.
Good luck with your decision :)  

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Hi guys,

I was watching Sky News the other night and the mortgage broker was saying that some banks will to substitute securities if you sell your PPOR and buy another. Don't know how it works exactly...

In your case; you would sell the PPOR and buy the one you want at the same time, so that your IP's will be securitised against your new PPOR without messing everything up. He said that not all lenders do this but some do. Maybe some of the brokers on here can decipher my ignorance?  

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JWR said: ↑
Hi guys,

I was watching Sky News the other night and the mortgage broker was saying that some banks will to substitute securities if you sell your PPOR and buy another. Don't know how it works exactly...

In your case; you would sell the PPOR and buy the one you want at the same time, so that your IP's will be securitised against your new PPOR without messing everything up. He said that not all lenders do this but some do. Maybe some of the brokers on here can decipher my ignorance?Click to expand...
That's true but if I run up say an additional $50,000 in buying selling costs. This would push my already maxes LVR outside the banks happy zone. The loan would increase to cover the new house maintaining the same LVR but the additional transaction costs would push it over.
This is why I would have to inject cash to cover.

Add to this a baby on the way in a few months !!!! Repayments are fine but i might have to shuffle priorities for a while.  

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only you know what you can afford to hold. for me having babies was a key time and we have made the decision to sell several ips. This has allowed us to keep mrs out of the workforce and at home for 7 yrs plus build a great home that will last as long as we want to live in it. Sad to see the others gone but I enjoy the buying process and in the end had to back my ability to find more profitable deals in the future.
nearly ready to start buying phase 2...and i havent lost a nights sleep about selling any of the ones we did
its all about what helps you meet your goals, short medium and long term  

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Seeing as you say you can afford repayments, have you considered taking out a personal loan for the deposit. While it may seem an expensive way to get money, in the long term it might work out cheaper than having to sell one of your IP's.

I'm no money genius though, and certainly not financially trained to give advice, just my opinion on one option.  

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