Can I take 6 months off work?

[WattleIdo]

Q1. Just wondering whether it's possible to use the equity in my property to take a break? What conditions would I need to meet? I'm sure that you wouldn't advise it but it might give me more energy to keep going if I know I can take a breather one day.

Q2. Taking this a few steps further - could I buy a house to live in and still take time off? The house would probably cost less to pay off than to rent.

 

[Asheam]

Unsure what you are asking here Wattleldo, the simple answer is that you can take six momths off if you have access to enough cash to meet all of your expenses for 6 months. The same principle applies whether you are renting or own your own ppor, you just need the cash to make the required repayments.

The cash could come from being saved, selling a property or as equity taken out of a property. Take care though as the interest on the drawdown would not be deductible as it is for private purposes.

 

[WattleIdo]

Unsure what you are asking here Wattleldo, the simple answer is that you can take six momths off if you have access to enough cash to meet all of your expenses for 6 months. The same principle applies whether you are renting or own your own ppor, you just need the cash to make the required repayments.

The cash could come from being saved, selling a property or as equity taken out of a property. Take care though as the interest on the drawdown would not be deductible as it is for private purposes.

Thanks Asheam, great answer - that's what I'm wondering. I would want to hang on to the little available cash that I do have. Am wondering what getting a 'draw down' would involve?

Some careful separation of funds would be one thing.

 

[Jamie M]

Hi wattlido

I can't see any lender being overly keen to lend for that purpose. It might be possible if you're able to demonstrate an ability to meet the liability during the 6 months but I can't see it being an easy deal to get across the line.

Cheers

Jamie

 

[datto]

Can I take the next 5 years off ..............please!

 

[WattleIdo]

Hi wattlido

...can't see any lender being overly keen to lend for that purpose.Jamie

Hmm - s'pose that's what I was wondering. Why would a bank want to lend me money to catch up on some sleep and a suntan? ..unless I already had more than enough cash ... in which case, why get a loan!?

Ha ha datto - hope you can in the not too distant future

 

[D.T.]

Can I take the next 50 years off ..............please!

Fixed that up

 

[Hodge]

Does the bank need to know what the equity release is for? You could tell them it's to purchase another ip in the future.

 

[The Y-man]

Some careful separation of funds would be one thing.

Is this a tax question or a loan/serviceability question?

The Y-man

 

[WattleIdo]

The Y-man:a tax question

Just going with the info that the interest won't be tax deductible. I'm ok with that.

But how do these people mentioned in the divorce thread refinance their homes without their partners knowing? How do the banks allow that? My properties are my own so wouldn't be cheating anyone else. But it must be possible - and I'd be a lot more reliable than some others, I think.

Is it a self-made trap to draw down equity for R&R?

 

[allsuccess]

As Hodge said, can't you refinance to the max value and then take a break?

I re-finance two of my properties and the intention was to buy another IP. However, it may/may not happen. But the re-financed cash is available to spend on anything.

 

[WattleIdo]

Really? Thanks Hodge and allsuccess.

 

[divine]

When we refinanced, on paper, it was to purchase an IP and share. The real intention was to purchase the property as IP and build a granny flat as PPOR. Now the circumstances changes, and it seems like we won't be purchasing anything for another year. So the money will just be sitting there for a while.

 

[nhg]

As above,

You can refinance into a LOC or O/S and use the money for whatever purposes, it simply means you will not be able to claim tax deductions on that portion of the loan.

I put money aside for when work and I parted ways separate from my investment funds.

Two things I noticed:
1. Money vanishes faster when you are unemployed at an exponential rate,
2. You need to have a defined plan, lounging about seems like a great idea, but it gets tiring very quickly and it actually ends up draining you.

I ran through my funds so fast, I was glad I hadn't used an open line of funds and had a fixed amount to spend otherwise I would have blown everything I worked hard for. It was quite a significant amount mind you and I have no idea how it disappeared.

It took me a month to adjust to no schedule, then spent 3 months chilling with my new born niece. Once that got boring (not my niece, just the doing nothing in between as all my friends still worked), I took up random jobs like 'speed dating stop watch guy' once a month, worked on some small construction work for myself and began to network like mad. Started to create games for myself to stay entertained.