IKEA FINANCE QUESTION

From: Rae B


Hi all,

I am just playing around with some ideas and would like some advice or way out thinking to help me dream more.

The situation is this: I control three IP's (one -ve & 2 +ve - all IO). I have also recently (8mths) purchased PPOR and am renting half of it. I currently earn $45k and have no other debts except for four mortgages. I am currently in East Timor saving heaps of dollars with the Army (approx $30k at completion of 6mth tour). At this point in time I will be in the Bne area for another two years before re-posting.

What I am playing around with:

Scenario #1: Refinance P&I on PPOR in Sep once honeymoon period expires to IO fixed for 3-5yrs. Using extra Timor savings to lower LVR down until property is neutrally geared at current market rental for area. Thus releasing extra cash flow to service future IP purchases.

Scenario #2: Continue to pay off P&I on PPOR until I depart Bne location (either paying Timor funds off loan or leave sitting in 100% Offset a/c). Then use extra equity to finance future IPs.

Are there any scenarios I haven't thought of?

Any thoughts will be appreciated. I will be tracking down an accountant once I return to Aust to do an indepth analysis.

Regards,

Rae
 
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Reply: 1
From: Rolf Latham


Hi Rae

Id be looking to refinance to a Interest Only product with an offset facility, for eg Westpac Rocket.

Then park you spare cash in the Offsetc Account, thereby giving you a reduced interest cost, but importantly still giving you easy access to that cash for deposits for the next place.

And another little plus of this system is that you will preserve the tax deductability of the original debt when you decide to use saved cash for your PPOR. This is not the case with either a LOC or Basic redraw product.

Ta

Rolf
 
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Reply: 1.1
From: Rae B


Rolf,

Thanks for your response. Is it possible to refinance with a different lender whilst I am out of country?

Regards,

Rae
 
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Reply: 1.1.1
From: Rolf Latham


Hi Rae

Yes, but obviously this would slow things a little. You are still resident for tax purposes.

Suss out your existing lenders attitude and products first before you move though, you may not have to move.

Ta

Rolf
 
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Reply: 1.1.1.1
From: Rae B


Rolf,

Am with ANZ for 2 x IP's and PPOR, and Bnk of Mlb for other IP.

Regards,

Rae
 
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Reply: 1.1.1.1.1
From: Rolf Latham


Hiya

Memory says both will do I/O offset accts, since BOM= Westpac.

You should be able to stitch it up within your existing lenders then
Ta

Rolf
 
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