Hi everyone
I must say that this certainly is an interesting and informative forum for those of us who have an interest in property investment.
As a fairly new "home-owner", I'm wondering whether my interest in property investment may be a little premature though. Being a newbie I'd very much appreciate any helpful hints or advice on options I might have given my current situation which follows:
* PPOR bought for $270K and currently owe $240K after 18 months of higher-than-minimum repayments. However, current value is within $380-$400K range.
* Current after-tax income between my wife and I is $6800/month, however I'm expecting significant payrises in the next 2 years.
I know we could probably be paying off an awful lot more, however given our choice to spend quite a lot on our lifestyle, we're currently feeling comfortable with our repayments of $600/week.
My wife and I are quite happy in our current PPOR, however being a three bedder and given we’re looking at starting a family next year, we’d need to lift the house and build out underneath. More importantly we’d like to do some other renovations, including new windows, new kitchen, external paintjob, and garage out front to improve street appeal.
Possible options:
A. Continue paying off PPOR, increasing repayments in a few years and hopefully paying it off in about 10 years time. However, extra renovations might result in the loan taking several extra years to pay off.
B. Change current PI loan (fixed at 6.5% for another 18 mths) to IO loan and use extra money to fund an IP. Perhaps also going ahead with some of our renovations (say $40-$50K worth) and just adding that onto our PPOR loan, which we could later pay off by selling our IP which would’ve experienced significant CG by then.
My question is basically; is it better to pay off our PPOR before investing when it’s going to take another decade to pay off our PPOR? Being on the river, the CG on our property has been at least 37% in 18 months, which is better than average, however I cannot see the growth rates changing much in Townsville which just seems to be going ahead so fast. The other factor to consider is that median rental prices on a 3 bedder are $300/week and there has been virtually full occupancy for a while now, thus reducing rental risk. My LVR based on current value would be 65% at the very most.
Should I put a bigger dent in my PPOR loan, or should I put the extra money into an IP which will most likely experience huge CG which I could later use to pay off my PPOR and then finance other IPs? The IP would be on the bottom of the market at say $300K. It just seems that spending a decade paying off a house is so unexciting compared to seeing an IP as well as a PPOR riding the huge capital growth wave that is likely to continue.
I must say that this certainly is an interesting and informative forum for those of us who have an interest in property investment.
As a fairly new "home-owner", I'm wondering whether my interest in property investment may be a little premature though. Being a newbie I'd very much appreciate any helpful hints or advice on options I might have given my current situation which follows:
* PPOR bought for $270K and currently owe $240K after 18 months of higher-than-minimum repayments. However, current value is within $380-$400K range.
* Current after-tax income between my wife and I is $6800/month, however I'm expecting significant payrises in the next 2 years.
I know we could probably be paying off an awful lot more, however given our choice to spend quite a lot on our lifestyle, we're currently feeling comfortable with our repayments of $600/week.
My wife and I are quite happy in our current PPOR, however being a three bedder and given we’re looking at starting a family next year, we’d need to lift the house and build out underneath. More importantly we’d like to do some other renovations, including new windows, new kitchen, external paintjob, and garage out front to improve street appeal.
Possible options:
A. Continue paying off PPOR, increasing repayments in a few years and hopefully paying it off in about 10 years time. However, extra renovations might result in the loan taking several extra years to pay off.
B. Change current PI loan (fixed at 6.5% for another 18 mths) to IO loan and use extra money to fund an IP. Perhaps also going ahead with some of our renovations (say $40-$50K worth) and just adding that onto our PPOR loan, which we could later pay off by selling our IP which would’ve experienced significant CG by then.
My question is basically; is it better to pay off our PPOR before investing when it’s going to take another decade to pay off our PPOR? Being on the river, the CG on our property has been at least 37% in 18 months, which is better than average, however I cannot see the growth rates changing much in Townsville which just seems to be going ahead so fast. The other factor to consider is that median rental prices on a 3 bedder are $300/week and there has been virtually full occupancy for a while now, thus reducing rental risk. My LVR based on current value would be 65% at the very most.
Should I put a bigger dent in my PPOR loan, or should I put the extra money into an IP which will most likely experience huge CG which I could later use to pay off my PPOR and then finance other IPs? The IP would be on the bottom of the market at say $300K. It just seems that spending a decade paying off a house is so unexciting compared to seeing an IP as well as a PPOR riding the huge capital growth wave that is likely to continue.