Am I on the right track?

[Paterson00]

So I'm just about to settle on my ppor and first home in oz since moving here in 2012. Should have a chunk left over so I'll be putting that in an offset account and start saving the next deposit. Mean while I'll be seeing if I can add value to the two current properties to increase equity for a future re mortgage. Does all that sound sensible and on the right path?

My other property is apositively geared house in the UK which is my old ppor.

Is there anything else I can be doing in the mean time?

Building my team, getting educated and adding value while saving?

 

[Jess Peletier]

Sounds good to me

When the time comes to buy your next IP, just be sure to structure it in the most tax effective way - using offset funds to buy an IP is not very tax effective.

Using the offset is great while you're saving as it maintains flexibility, but before you purchase you'll be best off putting the funds directly into your loan and redrawing them as a new split.

That way the PPOR debt is kept low and you effectively borrow the whole lot for the IP.

 

[thatbum]

Possibly doing the research and due diligence for the next potential purchase, if that's on the horizon.

That way when the right deal comes around, you will definitely know its the right deal.

 

[Paterson00]

Jessica, wouldnt doing that incur charges for the re mortgage to re release the money that you have just paid off of the ppor in the form of more lmi for example.

I just noticed hit are the same person I was chatting to this morning about the Freemantle seminar.

 

[Terry_w]

No remortgaging would be needed.

If you use cash the interest on your home loan would increase and the extra interest would not be deductible. if you paid down the loan and reborrowed the interest would be deductible.

 

[Peter_Tersteeg]

Costs involved would depend on the lender and package you've got. In most cases the cost of splitting the loan is negligible or nothing at all.

If done correctly, the "debt recycling" Jess has mentioned won't cost a cent in LMI unless you want to increase the total loan limit above what it currently is. If you do increase the loan limit, then you'd pay some LMI on the increase, but not the full loan.

Even if there are some costs involved in doing all this, it's a few hundred. It will pay itself back many times in legitimate tax deductions when compared to simply using the money from your offset account or existing redraw.

 

[Jess Peletier]

Jessica, wouldnt doing that incur charges for the re mortgage to re release the money that you have just paid off of the ppor in the form of more lmi for example.

I just noticed hit are the same person I was chatting to this morning about the Freemantle seminar.

Yep, that's me I'm always keen to hear the latest spruiker/educator and I've never been to one of hers before.

Regarding the costs, as Peter said there may be some one off costs but they will pay for themselves over and over, not to mention I believe the costs themselves are a deduction (cost of borrowing) - correct me if I'm wrong on that Terry?

 

[Paterson00]

Thanks all, the power of the forum strikes again. That's a great little bit of information. Hopefully I'll remember that at the time, hoping that's before the end of the year.

 

[Colin Rice]

@ Patterson00, we where also chatting on a facebook forum last night, small world indeed.

 

[Paterson00]

It is indeed Colin. Hopefully we will have a meet up at some point when I have more time on my hands, until then it is good to be able to chat on here.

I've become far more informed through using this forum and also through podcasts. Love it, hopefully it gets me to where I want to be.

 

[Colin Rice]

It is indeed Colin. Hopefully we will have a meet up at some point when I have more time on my hands, until then it is good to be able to chat on here.

That would be good. You have my details, so when your ready