Investment financial structue.

[Brad81]

Hi all
I currently have an and simplicity plus home loan that has been made interest only as the home is now an investment property with approx $110,000 in equity. I have another investment loan of $35,000 and 2 credit cards totalling $20,000 in debt. I want to buy and duplicate IP's moving forward . What I'm not sure about is how I can structure this the most effective way. Should a line of credit be sought from the equity to use as my IP deposit ? Is this the best way to not cross secure? And how should my other debts be incorporated? Please help

 

[Jamie M]

Set up a second loan for $110k.

That loan will be used as the deposit/costs on your next IP(s)

The loan can either be a LOC or a standard variable interest only loan with redraw (the latter is usually slightly cheaper).

Cheers

Jamie

 

[Jamie M]

I forgot to ask - how are you calculating equity?

 

[Brad81]

The equity is an approximate figure from our bank. What would you suggest I do with the other debts? Use the new $110,000 loan to pay off those debts?

 

[Jess Peletier]

Generally speaking it's good to get rid of debts, especially CC if it's a super high interest rate.

If it works with your plans, I'd suggest splitting off $20k out of your equity and paying it off over a short loan term. It's usually a bad idea to spread out that kind of debt over 30 years.

Chat to your broker to figure out the best way forward taking your whole financial situation into consideration.

 

[Paul@PFI]

One idea for the card is to do a IO loan for four / five years and then pay that as P&I that will extinguish the $20K. Or consider switch to low rate card etc. Lots of card deals there for the asking. Seems from media today nobody does !!

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