Is the agent just trying to get more money for the owner?

[fullylucky]

umm maybe you should speak with a tax adviser ??

Should be simple right? just draw out enough to pay for the deposit and pay as little as possible for the new house since its an investment. so all the interest is tax deductable. and pay off as much as possible for my current home loan since it is my PPOR?

keep all receipts and claim them in this financial year.

 

[Rolf Latham]

Should be simple right? just draw out enough to pay for the deposit and pay as little as possible for the new house since its an investment. so all the interest is tax deductable. and pay off as much as possible for my current home loan since it is my PPOR?

keep all receipts and claim them in this financial year.

sure.............but assume for a minute your PPOR loan that you are redrawing from is ONE pi loan as I guess it might be,it aint that simple

if your loan is IO its a little simpler

Your broker banker or you need a kick to SPLIT the loan facility to the amount you need for the IP, and the balance to the PPOR.

Then focus on the PPOR debt

ta

rolf

 

[alexlee]

I got pre approval for 600k loan from CBA. I have the deposit ready. I have to redraw it out of my existing home loan... I worked very hard to pay it off now it has to come out

You don't want to borrow money, save the whole purchase amount. Don't play the game if you're not willing to get your clothes dirty.

Pre-approval doesn't mean all that much. Start the application process immediately.

The agent gave me a sheet of paper with BSB and Acc number. And the deposit amount but he didn't fill out the property address?

If I just transfer him the money he won't say he didn't get it?

That would be the agent's trust account. Keep a record of the bank transfer or deposit slip. And can you please hold down the paranoia? The next time the tenant reports a blocked toilet you're going to have a heart attack.

Also the agent said I need to give him my solicitor's details? How do I go about that?

Email, fax or letter, with the solicitor's name and contact details on it. Make sure you give the agent details to your solicitor.

You do have one, right?

I haven't done pest and building I think I have 14 days to do that.

And 21 days for finance.

'I Think' isn't going to hold up in court. Given you've signed the contracts, the clock starts ticking. Read the contract now, look at the calendar. Make sure you know EXACTLY which day everything has to be done by.

 

[fullylucky]

I had a solicitor for my current house which i purchased a few years ago. Maybe it's the same one? or I should get a new one?

yes it's 14 days for P & B. this should cost $400?

yes it says trust account on the paper...

Sorry for being paranoid. I'm gonna transfer the money tomorrow morning.

 

[alexlee]

Personally, I think you're seriously messing up your priorities. With things which are normal (long settlement, paying deposits, etc) you see snake pits around every corner. Things that might be real problems (unfinished pool, structuring the loan, deadlines) you're dismissing out of hand.

Assuming you are redrawng from the PPOR loan (and not taking money out of an offset) the interest on the amount you redraw will be deductible, so it doesn't matter if you draw more from the PPOR loan and take a smaller mortgage on the IP. The interest deduction will be the same.

HOWEVER, because your PPOR loan is now mixed deductible / non-deductible, interest has to be apportioned. Gets complicated, as Rolf said, if it's P&I because you have to apportion the principal repayments as well.

 

[alexlee]

I had a solicitor for my current house which i purchased a few years ago. Maybe it's the same one? or I should get a new one?

You went through all of this without having anyone review the contract?

Here's something for next time: if you're ready to buy, get a solicitor / conveyancer, mortgage broker, quantity surveyor and building / pest inspectors lined up BEFORE you look at a property. Have the solicitor / conveyancer review the contract before you sign.

yes it's 14 days for P & B. this should cost $400?

Forget the cost. That doesn't matter. More important: 14 working days? Or 14 calendar days?

Sorry for being paranoid. I'm gonna transfer the money tomorrow morning.

You're the one who's taking on 750k in debt.

 

[fullylucky]

Personally, I think you're seriously messing up your priorities. With things which are normal (long settlement, paying deposits, etc) you see snake pits around every corner. Things that might be real problems (unfinished pool, structuring the loan, deadlines) you're dismissing out of hand.

Assuming you are redrawng from the PPOR loan (and not taking money out of an offset) the interest on the amount you redraw will be deductible, so it doesn't matter if you draw more from the PPOR loan and take a smaller mortgage on the IP. The interest deduction will be the same.

HOWEVER, because your PPOR loan is now mixed deductible / non-deductible, interest has to be apportioned. Gets complicated, as Rolf said, if it's P&I because you have to apportion the principal repayments as well.

I want to keep it neat. I'm gonna have a second homeloan account for the IP.

I'm with CBA and I don't use the offset account (It's called MISA account).

I just have everything go into my homeloan account (my pay goes straight in.)

Q1. So you're saying if I redraw any part of it that part of interest is tax deductible?

I can't deduct interest for my current home loan.

Q2. When I get the rates bill for the IP I can tax deduct that right?
What about internet bills, water and electricity bill?

 

[fullylucky]

You went through all of this without having anyone review the contract?

Here's something for next time: if you're ready to buy, get a solicitor / conveyancer, mortgage broker, quantity surveyor and building / pest inspectors lined up BEFORE you look at a property. Have the solicitor / conveyancer review the contract before you sign.



Forget the cost. That doesn't matter. More important: 14 working days? Or 14 calendar days?



You're the one who's taking on 750k in debt.

no i didn't get a solicitor / conveyancer, mortgage broker to look at the contract. don't want to spend the money. but maybe next time.

14 calendar days I think this is normal? and 21 calendar days for finance.

After settlement I will be more than 1mil in debt hehe.

 

[alexlee]

no i didn't get a solicitor / conveyancer, mortgage broker to look at the contract. don't want to spend the money. but maybe next time.

Had you looked into it, you would realise that solicitors / conveyancers often include the review of contracts (even ones that you don't end up going through with) as part of their fee. You're going to have to get one to do the conveyancing now anyway, unless you're planning to do it yourself. You're willing to buy a 700k+ property and yet not willing to pay a couple hundred bucks to cover yourself legally?

Mortgage brokers get paid by the lender, not you. They can offer you products from different lenders. Your CBA guy? Guess what they offer you.

14 calendar days I think this is normal? and 21 calendar days for finance.

Doesn't matter what's normal. What's important is what YOUR contract says.

Do you understand what you actually need to be able to say you have finance lined up? A pre-approval isn't it.

After settlement I will be more than 1mil in debt hehe.

Welcome to the first step on the ladder.

 

[pinkboy]

no i didn't get a solicitor / conveyancer, mortgage broker to look at the contract. don't want to spend the money. but maybe next time.

14 calendar days I think this is normal? and 21 calendar days for finance.

After settlement I will be more than 1mil in debt hehe.

Happy to spend $750k blind, but not spend 15min on the phone to a broker for free and a Soli for very small cost?

Yikes! What will happen when you have to spend $120 for a plumber to change out a tap washer?

pinkboy

 

[fullylucky]

well. i'll try to get everything sorted out more tomorrow.

i'm going to sleep. but feel free to post more details here everyone.

i will get around to reading it tomorrow.

you guys probably don't care but i will keep everyone updated on the process.

 

[fullylucky]

Happy to spend $750k blind, but not spend 15min on the phone to a broker for free and a Soli for very small cost?

Yikes! What will happen when you have to spend $120 for a plumber to change out a tap washer?

pinkboy

The agent said he will give me a copy of the contract tomorrow. I still have a cooling off period right? I can show it to a soli tomorrow?

when you say broker do you mean homeloan broker?

i'm gonna stick with CBA. they are offering 5.4%

 

[vaughan]

you guys probably don't care but i will keep everyone updated on the process.

I care.

I'm looking forward to the "an easement stole my granny flat" and "my pool encroaches my neighbour's land" posts because you didn't bother to get a survey done or even look at the documents in the contract of sale.

Have you considered doing a quick reno to the place before settlement? ROFL.

 

[Rolf Latham]

i'm gonna stick with CBA. they are offering 5.4%

but Ubank will do 5.15

ta
rolf

 

[pinkboy]

The agent said he will give me a copy of the contract tomorrow. I still have a cooling off period right? I can show it to a soli tomorrow?

when you say broker do you mean homeloan broker?

i'm gonna stick with CBA. they are offering 5.4%

When I see a Broker, I usually leave just that - broker than I already was!

pinkboy

 

[Alex P Keaton]

Funny thread.... Can you give us an update.

 

[baby blue eyes]

You need to split you loan. Redrawing for the IP loan and then popping your pay in and redrawing for personal will render your IP redraw to personal an non claimable in no time. This type of loan is outdated and limiting.

Speak to the bank, ask for a split keep to quarantine the investment loan.

Better still chat to cba about their everyday offset introduced last year, way better than misa. Use that offset on your personal house loan and you will achieve the same result as you redraw account

Read up on tainting you loans before you really stuff up you borrowing. Don't try to do your own tax ....you clearly have no idea on what is deductible

 

[fullylucky]

Funny thread.... Can you give us an update.

Here is an update:

I never went through with this property. Got cold feet and bailed last day of cool down.

bought another property instead close to $800k. $825k (inc stamps)

did my investment loan with CBA. std var. loan at 4.8%. i'm happy with my loan. settlement went through smoothly.

the new ip is currently fully tenanted. it took close to 3-4 weeks before i got the new house ready for tenants. fixed up everything.

conveyance cost was around 850$ but coz i bailed last minute of the other property it was 1000$ all up.

positive cash flow i think. i just have to wait and see what the water and elec bill will be. but it should be positive cash flow.

the property i didnt buy (OP) later went to auction but 1 day before auction it was sold. i looked up rp data the price is still not there. not sure what it sold for.

 

[fullylucky]

You need to split you loan. Redrawing for the IP loan and then popping your pay in and redrawing for personal will render your IP redraw to personal an non claimable in no time. This type of loan is outdated and limiting.

Speak to the bank, ask for a split keep to quarantine the investment loan.

Better still chat to cba about their everyday offset introduced last year, way better than misa. Use that offset on your personal house loan and you will achieve the same result as you redraw account

Read up on tainting you loans before you really stuff up you borrowing. Don't try to do your own tax ....you clearly have no idea on what is deductible

i got homeloan 1 and homeloan 2.

and two offset accounts. both offset accounts offset homeloan 1.

homeloan 2 is interest only and it sucks from offset account 2 every month (interest only).
i still have 2 other misa accounts open and some other misc accounts.

 

[fullylucky]

Learnings / Mistakes (you can learn from my mistakes without having to go through what i went through/paying the cost):

put EVERYTHING in the contract. if its not in the contract vendor wont do it. give. e.g. mow the lawn. change furniture etc. must provide X number of keys... i only got the front door key and 1 room key no other keys! had to change all locks...

try to get conveyancer to do special water reading as close to settlement as possible. coz previous owners can still spam water usage between special water reading and settlement and you still have to pay for their water usage.

my first IP; i didn't know rates bill is more expensive for IPs... i think its total bs. should be the same price. but it ain't.

alot of other costs (hidden) that you don't think about when buying and selling properties. everyone gets a piece of your action. land tax. rates bill change over cost is like 200$. ?? what bs.

also remember to do the ATO e variation submission if you think it will be negative cash flow since it will reduce your PAYG cash withheld so you get more pay that you can pay off your home loan faster!

hope this helps...