Got the cash - how much for deposit?

[bene313]

If you've got the cash for 20% down on a purchase (and that's all the cash you have), what do people prefer -

a) 20% deposit, little or no LMI, loss of liquidity without refinancing

b) 5-10% deposit, excess cash to offset a/c, some liquidity (eg to buy shares, another IP deposit etc).

Cheers!

Ben

 

[Bradsdad]

What's the purpose of the acquisition? If for a PPOR is the intention to leave it that way?

If a PPOR the 80% option is most likely the way to go (not nowing your full situation) and maybe a seperate LOC for the extra 10% for your IP deposit or apply later for it. This way the purpose of the funds are kept seperate.

If for an IP then the more you borrow the more interest to claim. Your accountant would be in the best position to let you know how/if this will benifit you.

 

[Rolf Latham]

In many circumstances I like the client to look at retaining some cash buffer.

Depends on circumstances with their source of income etc

ta
rolf

 

[navjit6]

What's the purpose of the acquisition? If for a PPOR is the intention to leave it that way?

If a PPOR the 80% option is most likely the way to go (not nowing your full situation) and maybe a seperate LOC for the extra 10% for your IP deposit or apply later for it. This way the purpose of the funds are kept seperate.

If for an IP then the more you borrow the more interest to claim. Your accountant would be in the best position to let you know how/if this will benifit you.

When getting a LOC, is the rate the same as if you were purchasing a property from the same lender or is it higher??

 

[13910]

More details? First purchase? PPOR or IP?

Do you have equity in an existing property?

Cheers
Greg

 

[Bradsdad]

When getting a LOC, is the rate the same as if you were purchasing a property from the same lender or is it higher??

Depends on the lender but it can be 0.1% higher.

 

[bene313]

More details? First purchase? PPOR or IP?

Do you have equity in an existing property?

It's a first purchase so no equity in existing property.

IP for now but may be PPOR later.

Property value 250k and leaves some borrowing capacity.

Salary income (50k) is expected to grow well over the next few years.

Future IP purchases will occcur as servicablility / LVR allows.