Reason for not using funds for deposit?

Discussion in 'Property Investment - Other' started by bradwilks80, 10th Sep, 2007.

  1. bradwilks80

    bradwilks80 Member

    Joined:
    2nd Aug, 2007
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    All,

    I am considering buying a 2nd IP. I will be using equity on IP1 as a deposit. I also have the required $12000 in cash savings for Legal/Govt costs.

    I have contacted my bank and they advised that as the property being purchased is an investment I would be better off borrowing the full amount and not to use my $12000.

    What is the reason for this?

    Brad.
     
  2. Simon

    Simon Living the Dream

    Joined:
    4th Mar, 2001
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    Location:
    Newcastle NSW
    Maximise the deductible debt.

    If you own a PPOR then the savings would be better left in an offset account against any mortgage. If you don't yet own a PPOR then perhaps you could keep the savings for one.

    But many investors keep their savings for nondeductible purposes such as a PPOR.

    Cheers,