Hi everyone,
Am a long time reader of the forum and first time poster. Looking for some info and advice on purchasing my first investment property. Here are some main points:
1. Got an offer ($660k) for a house accepted last Friday. Location is in a good neighborhood with good schools (one of the primary reason for my wife and I). We have been looking around the area for over a year and finally found one that ticks all our boxes. The investment property will be under my name for now as we're a single income family.
2. We plan to rent out the property for at least a couple of years and move in when our eldest kid is ready for primary school. We will then switch our PPOR to be our investment property. PPOR is in a good location near CBD and we felt there is value in holding the property for long term investment.
3. We currently owe about $327k on our PPOR, with equity built up to about $85k. The PPOR loan is variable rate 6.14%. We plan to withdraw the equity to make up for the 20% deposit required for the investment property. We also have cash in hand of $130k that we will use to cover the deposit and other related purchasing costs.
Questions we do have:
1. Our plan is to borrow up to the limit where LMI is not required (80 or 85%, depending on the loan product). The best variable rate I've found on the market is 6.29% by Bankwest (Online Home Loan, appreciate if anyone have any experience with applying for that home loan).
On the fixed rate side, I've also found Vplus (www.vplus.com.au), formerly Better Options homeloan, offering the cheapest 3 yr fixed rate of 5.65%, but it seems to me that this is too good to be true! (again would appreciate if anyone have had good/bad experience to share on that lender).
2. We're debating whether to hedge our risk and apply for the above 3 yr fixed rate loan or just take the ride with the variable rate loan. We're a little concerned with our monthly cashflow (as we're operating on a single income, paying two mortgages will be a challenge) once we have that property in our hands. So paying even a little less mortgage is an attractive option for us.
3. The choice of interest only or Principal & Interest loan. As we will be renting out the property for a couple of years, we're also considering the benefits (whether there are any) of interest only loan. What would be the benefits of having interest only loan for an investor with primary income from full-time employment?
4. Tax implications of turning our PPOR into investment property down the road and whether the equity we've withdrawn from it can still be tax deductible. We're already in the process of finding ourselves a tax accountant to help with the taxation side of things.
Would appreciate any inputs from the folks here. Thanks.
Am a long time reader of the forum and first time poster. Looking for some info and advice on purchasing my first investment property. Here are some main points:
1. Got an offer ($660k) for a house accepted last Friday. Location is in a good neighborhood with good schools (one of the primary reason for my wife and I). We have been looking around the area for over a year and finally found one that ticks all our boxes. The investment property will be under my name for now as we're a single income family.
2. We plan to rent out the property for at least a couple of years and move in when our eldest kid is ready for primary school. We will then switch our PPOR to be our investment property. PPOR is in a good location near CBD and we felt there is value in holding the property for long term investment.
3. We currently owe about $327k on our PPOR, with equity built up to about $85k. The PPOR loan is variable rate 6.14%. We plan to withdraw the equity to make up for the 20% deposit required for the investment property. We also have cash in hand of $130k that we will use to cover the deposit and other related purchasing costs.
Questions we do have:
1. Our plan is to borrow up to the limit where LMI is not required (80 or 85%, depending on the loan product). The best variable rate I've found on the market is 6.29% by Bankwest (Online Home Loan, appreciate if anyone have any experience with applying for that home loan).
On the fixed rate side, I've also found Vplus (www.vplus.com.au), formerly Better Options homeloan, offering the cheapest 3 yr fixed rate of 5.65%, but it seems to me that this is too good to be true! (again would appreciate if anyone have had good/bad experience to share on that lender).
2. We're debating whether to hedge our risk and apply for the above 3 yr fixed rate loan or just take the ride with the variable rate loan. We're a little concerned with our monthly cashflow (as we're operating on a single income, paying two mortgages will be a challenge) once we have that property in our hands. So paying even a little less mortgage is an attractive option for us.
3. The choice of interest only or Principal & Interest loan. As we will be renting out the property for a couple of years, we're also considering the benefits (whether there are any) of interest only loan. What would be the benefits of having interest only loan for an investor with primary income from full-time employment?
4. Tax implications of turning our PPOR into investment property down the road and whether the equity we've withdrawn from it can still be tax deductible. We're already in the process of finding ourselves a tax accountant to help with the taxation side of things.
Would appreciate any inputs from the folks here. Thanks.