Hi, hope this is right thread ... not too sure. In about 12 months, we may be paying off our home loan, so a couple of questions:
1. Instead of paying the loan right off, I feel like I should leave a few k to keep the loan "open" - this is so that we can redraw if we need to, instead of applying for a whole new loan for whatever - renovations etc.
Is this a good idea, I can only see it as a con, and paying very little interest a month?
2. We will then have surplus funds, and I'm wondering if it's a good idea to start paying down our investment property (purchased 2007 for 305k)? Loan 318k, rental probably valued at 310k. The rent (360 pw) is just about covering the interest, insurance, rates etc.
Always viewed it as negative gearing, but now, I'm trying to get a feel on whether we should start paying it off. This might seem like a basic question but I need some advice before I present my opinion to the OH! He's been disillusioned by the rental and the amount of capital growth so far, if he had his way he would probably sell it but I feel like we are just about breaking even, so with a few more years if we start paying it off and rent increases a bit we might start heading down positive cashflow.
I would like to hold it (even though I have been on the disillusioned path as well) now that it's breaking even, still hoping for capital growth but positive cashflow would be a bonus.
I doubt very much we will do any more investing in property, so would not look at using home as equity to refinance or purchase.
Thanks for any advice
1. Instead of paying the loan right off, I feel like I should leave a few k to keep the loan "open" - this is so that we can redraw if we need to, instead of applying for a whole new loan for whatever - renovations etc.
Is this a good idea, I can only see it as a con, and paying very little interest a month?
2. We will then have surplus funds, and I'm wondering if it's a good idea to start paying down our investment property (purchased 2007 for 305k)? Loan 318k, rental probably valued at 310k. The rent (360 pw) is just about covering the interest, insurance, rates etc.
Always viewed it as negative gearing, but now, I'm trying to get a feel on whether we should start paying it off. This might seem like a basic question but I need some advice before I present my opinion to the OH! He's been disillusioned by the rental and the amount of capital growth so far, if he had his way he would probably sell it but I feel like we are just about breaking even, so with a few more years if we start paying it off and rent increases a bit we might start heading down positive cashflow.
I would like to hold it (even though I have been on the disillusioned path as well) now that it's breaking even, still hoping for capital growth but positive cashflow would be a bonus.
I doubt very much we will do any more investing in property, so would not look at using home as equity to refinance or purchase.
Thanks for any advice