we have this property that we purchased for $369k in dec 99. a similar one in the complex recently sold for $440k. Initially, we were getting $470pw but with the softening rental market we are now getting $420pw.
the property was finance with 2 loans:
1. $295.2k IO @ variable rate
2. $73.8k IO @ 6% fixed
we have since made lump sum payments on both loans:
1. $25.2k leaving balance of $270k - current repayments about $1.4kpm
2. $28.8k leaving balance of $45k - current repayments $225pm
We have for some time been looking at making another lump sum payment on loan 1 of $70k and also accelerating our payment on loan 1 to about $5k per month - hopefully getting rid of the loan in no time.
The thinking being that we have money in the bank getting less than 5% per annum, half of which goes to tax. Were thinking that if we put the money in the loan, we can always redraw off it when a good investment opportunity comes along or even revalue the property and borrow against the increased equity.
is this a good idea or not?
b&j
the property was finance with 2 loans:
1. $295.2k IO @ variable rate
2. $73.8k IO @ 6% fixed
we have since made lump sum payments on both loans:
1. $25.2k leaving balance of $270k - current repayments about $1.4kpm
2. $28.8k leaving balance of $45k - current repayments $225pm
We have for some time been looking at making another lump sum payment on loan 1 of $70k and also accelerating our payment on loan 1 to about $5k per month - hopefully getting rid of the loan in no time.
The thinking being that we have money in the bank getting less than 5% per annum, half of which goes to tax. Were thinking that if we put the money in the loan, we can always redraw off it when a good investment opportunity comes along or even revalue the property and borrow against the increased equity.
is this a good idea or not?
b&j