First Home Buyer - should I wait?

[Ealbech]

Here is my brief story:

We've moved from overseas to Sydney half a year ago. I've managed to find a job, so we are now SINK (Single Income No Kids).

I'm thinking to buy our first apartment here, but now I can see a lot of competition for properties up to 400K from other FHOGs. As this grant is only 7K more than the previous one, I have a strong feeling that in case of returning that grant back to 7K, a lot of FHOGs will disappear from market and sellers will have to drop down their prices. In case FHOG will stay as 14K/21K, the overall unemployment will drive prices down.

Another question is about mortgage. I have deposit of 200K. My plan is to buy property as PPOR and convert it to IP after 6-months of leaving there. As I understand it's better for me to pay as much interest repayments as I can so I can deduct them from my taxes. So can I put my deposit on offset account and then withdraw it after conversion to IP? Can I offset interest rate repayments if I take loan from my parents overseas?

To sum up I'm trying to:
1) Reduce my expenses for rent by living in my own apartment
2) Reduce Tax base
3) Get FHOG

Any ideas will be appreciated.

 

[Jacque]

It depends on your budget which is?

Yes FHB's are active in the sub $600K price bracket in many suburbs- I know many investors who are now waiting to see if the grant is extended before jumping in. After all, artificial stimulation goes hand in hand with handouts

Offset accounts can work well, depending on your circumstances- best bet is to talk to an experienced mortgage broker first especially given your situation with an overseas loan.

 

[Ealbech]

I'm planning to spend up to 450K.

I can get loan for 250K and pay with full deposit or pay the minimum deposit to get rid of insurance charges. What's the best method?

And for overseas loan my question was - Can I deduct interest payment from my taxes if I take loan not from commercial bank?

 

[Rolf Latham]

Hiya EAL

Cant advise on what will happen to the market bit, my crystal ball needs some new coat of Crystal Clear.

On the mortgage side, conventional wisdom in your current and future scenario suggests an 80 % lend with an Interest only loan and a 100 % offset account.

Place the left over cash into the offset acct and this will reduce the interest payable while still protecting the tax benefits for the future

ta
rolf

 

[jaycee]

Rolf I have to second the motion another poster made, stop making so much clear sense, even I can see the wisdom in what you're saying !

 

[Learnings]

Rofl took the words out of my mouth.

Offset account the 200k to reduce the recurrings.

Withdraws from an offset account dont effect your tax.
withdraws (redraws) from the loan do.

Read last months property investor magazine, they had a good article on it.