Hi all,
Currently I have 1 IP and am looking to purchase a 2nd IP. I intend to take out some of the equity from my 1st IP to purchase the 2nd IP. As my 1st IP is currently under a Interest Only, Fixed Loan (expiring Dec 2014), I am wondering though, what is the better option?
Option A: Pay down as much of the principal (as I can pay off up to 5% of the principal annually) of the 1st IP to increase the amount of equity I can take out to purchase the 2nd IP later on next year.
Option B: Save up as much I can in a high savings account and just use that as the deposit to purchase the 2nd IP.
I guess it all comes down to 2 things:
1) What's better from a tax perspective?
2) What's better in terms of being able to buy the 2nd IP without any much problems (as I intend to only put down a 5% deposit). Yes, I know, I'll be paying some LMI, but I'm young, it's not a huge price for me yet.
Any thoughts/suggestions would be helpful.
Thanx!
Currently I have 1 IP and am looking to purchase a 2nd IP. I intend to take out some of the equity from my 1st IP to purchase the 2nd IP. As my 1st IP is currently under a Interest Only, Fixed Loan (expiring Dec 2014), I am wondering though, what is the better option?
Option A: Pay down as much of the principal (as I can pay off up to 5% of the principal annually) of the 1st IP to increase the amount of equity I can take out to purchase the 2nd IP later on next year.
Option B: Save up as much I can in a high savings account and just use that as the deposit to purchase the 2nd IP.
I guess it all comes down to 2 things:
1) What's better from a tax perspective?
2) What's better in terms of being able to buy the 2nd IP without any much problems (as I intend to only put down a 5% deposit). Yes, I know, I'll be paying some LMI, but I'm young, it's not a huge price for me yet.
Any thoughts/suggestions would be helpful.
Thanx!