I was analyzing my sittuation and looking at a few options and I came up with a pretty good idea.
To start off I am 18 years old I am a new property investor , At the moment I can save around $15 k - $20 k a year but dont have much saved up at the moment I need to save money for a deposit. One of the ways I could get around this is through my dads DIY super fund. One of the options that comes with a DIY funds is the ability to become part owners in property through his super.
If say i wanted to invest 50 / 50 in a property for $350,000 with my dad I could use a lump sum of $45,000 from his DIY fund and get loan for the remainging $305,000. Because I can save aprox $15, 000 a year an attractive option is for me to make additional payments to the loan and in 3 years both parties will own 50 % of the equity. Below is a table showing how much interest I would save cuting a loan down from 15 years to 8 years and 6 months .
Initial Calculator Results
You originally borrowed: $305,000
Loan term: 15 years
At an interest rate of: 7%
Monthly repayment figure: $2,741
With a final payment of: $2,741
Total interest paid: $188,457
Updated Calculator Results
You originally borrowed: $305,000
New loan term: 8 years 6 months
At an interest rate of: 7%
Monthly repayment figure: $3,991
With a final payment of: $836
Total interest paid: $98,970
Total interest saved: $89,486
Time saved: 6 years 6 months
As evident above my interest has been cut down $89,486.
By making larger loan repayments we are also making a large loss (negatively gearing ) which is supplement by my $15,000 of savings. Due to this the large ammount of money lost is claimed as a tax deduction. The property would also be positively geared in 8 years and 6 months because the loan is totally paid off.
I know some people will be thinking your tieing up too much money into the property , you have to remeber we are using my dads super money and he is a first time property investor like me. He doesnt want it to be to highly geared. Also after a few years we can use the equity to fund more properties. Either way if I dont buy a an IP the money that I save will be tied up in the bank doing nothing , or if i pruchased a 50 / 50 joint venture with my dad atleast the money will be in the equity of the IP.
With the intial ammount funded by my dad , half of it $22,500 could be finance by himself and the $22,500 by his super fund. Of which the $22,500 funded by my dad could be used as the amount for the deposit effectively not using the DIY for gearing.
To start off I am 18 years old I am a new property investor , At the moment I can save around $15 k - $20 k a year but dont have much saved up at the moment I need to save money for a deposit. One of the ways I could get around this is through my dads DIY super fund. One of the options that comes with a DIY funds is the ability to become part owners in property through his super.
If say i wanted to invest 50 / 50 in a property for $350,000 with my dad I could use a lump sum of $45,000 from his DIY fund and get loan for the remainging $305,000. Because I can save aprox $15, 000 a year an attractive option is for me to make additional payments to the loan and in 3 years both parties will own 50 % of the equity. Below is a table showing how much interest I would save cuting a loan down from 15 years to 8 years and 6 months .
Initial Calculator Results
You originally borrowed: $305,000
Loan term: 15 years
At an interest rate of: 7%
Monthly repayment figure: $2,741
With a final payment of: $2,741
Total interest paid: $188,457
Updated Calculator Results
You originally borrowed: $305,000
New loan term: 8 years 6 months
At an interest rate of: 7%
Monthly repayment figure: $3,991
With a final payment of: $836
Total interest paid: $98,970
Total interest saved: $89,486
Time saved: 6 years 6 months
As evident above my interest has been cut down $89,486.
By making larger loan repayments we are also making a large loss (negatively gearing ) which is supplement by my $15,000 of savings. Due to this the large ammount of money lost is claimed as a tax deduction. The property would also be positively geared in 8 years and 6 months because the loan is totally paid off.
I know some people will be thinking your tieing up too much money into the property , you have to remeber we are using my dads super money and he is a first time property investor like me. He doesnt want it to be to highly geared. Also after a few years we can use the equity to fund more properties. Either way if I dont buy a an IP the money that I save will be tied up in the bank doing nothing , or if i pruchased a 50 / 50 joint venture with my dad atleast the money will be in the equity of the IP.
With the intial ammount funded by my dad , half of it $22,500 could be finance by himself and the $22,500 by his super fund. Of which the $22,500 funded by my dad could be used as the amount for the deposit effectively not using the DIY for gearing.
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