Mortgage Advice Request - IP/PPR Questions.

[mitchnewy]

Hi all,

I'm looking for some general advice on some property purchasing. Here are the relevant details:

1. I'm currently living with the parents. I own a rental property worth ~$250k. Mortgage remaining: $50k and loan is in advance by $70k. Currently reducing the mortgage by $1000 p/week to reduce the debt. Loan is fixed till 6/2012 at 7.29%.

2. I'm looking to buy a home to live in as PPR. The house purchase price is $490k.

3. My overall pre-tax annual income is $68000. And $13500 in rental income before costs. I'm single atm and this is the total income.

4. I also have a Term Deposit of $100k to use as a deposit for the PPR house.

What are my best options in the above situation? What is actually possible in this scenario? and although I think it is unachievable, is my single income considered normal and ok to support a loan of approx $380k?

In short, What should I do?


Thanks,
Mitch.

 

[Rolf Latham]

Hi Mitch

Welcome

Couple of things.

You might consider to Stop paying the IP mortgage down unless you are looking to sell this property. You are reducing tax deductible debt and looking to take on non deductible debt. Its probably a bit late to do much about it now, but you would have been better served to put all your spare extra cash into an offset account against the mortgage.

Then when you buy ur own place u would use that cash to reduce the PPOR mortgage while still getting a good dedn against the full IP debt.

A 380 mortgage might be achievable on the basic data we have, HOWEVER, if u have concerns that YOU cant afford it, then I would not go down that track

ta

rolf