Hey everyone, me once again, but this time with a far more general question about deposits etc - it needs a bit of a back story.
I'm 26 and married, my wife is 6 months pregnant with our first child and we've just moved back from 2 years in London, and currently staying with my parents while we get back into the swing of things. My wife's parents have recently bought a brand-new investment townhouse in Brisbane, and they'd like us to move in there at a reduced rent to help us out with everything (they're good folks). They're happy to only charge us $200, while the market rent for the place would be at least $340 per week. They're happy just claiming the deductions.
The thing is, when we're ready to buy our PPoR or first IP, they're also more than happy to go guarantor (?) on the property to enable us to borrow up to 95% LVR (if you can still get those loans).
So my question is basically this - do I use the next 12 months at reduced rent and save like crazy (conservative estimate should be able to save close to $20,000 in 12 months) and use it as a deposit to buy, OR, should I take them up on the offer of guarantor and purchase an IP earlier? If I do purchase an IP, I would then pay them the full $350 p/w rent as I would feel uncomfortable owning a property but paying cheaper rent to them. So it would cost an extra $150 per week.
My gut feeling is to take advantage of the cheaper rent and build up the savings, but that might just be the old "save until you can afford a deposit" mentality. Affording the repayments (I/O) loan isn't a problem, the serviceability is 100% fine.
I'm also thinking that if I get into the IP sooner rather than later, I will pay an extra $7,800 rent in 12 months. But if my IP's capital increases by anything more than that amount, then I've made a profit in net worth. Also, gotta keep in mind I've got a little one on the way, so realistically I would probably stick with the cheaper rent for a least a couple of months after the wife pops (that's how child birth works, right? A little pop and then a bundle of joy? )
Anyway folks, sorry about the rant! Let me know what you think!
I'm 26 and married, my wife is 6 months pregnant with our first child and we've just moved back from 2 years in London, and currently staying with my parents while we get back into the swing of things. My wife's parents have recently bought a brand-new investment townhouse in Brisbane, and they'd like us to move in there at a reduced rent to help us out with everything (they're good folks). They're happy to only charge us $200, while the market rent for the place would be at least $340 per week. They're happy just claiming the deductions.
The thing is, when we're ready to buy our PPoR or first IP, they're also more than happy to go guarantor (?) on the property to enable us to borrow up to 95% LVR (if you can still get those loans).
So my question is basically this - do I use the next 12 months at reduced rent and save like crazy (conservative estimate should be able to save close to $20,000 in 12 months) and use it as a deposit to buy, OR, should I take them up on the offer of guarantor and purchase an IP earlier? If I do purchase an IP, I would then pay them the full $350 p/w rent as I would feel uncomfortable owning a property but paying cheaper rent to them. So it would cost an extra $150 per week.
My gut feeling is to take advantage of the cheaper rent and build up the savings, but that might just be the old "save until you can afford a deposit" mentality. Affording the repayments (I/O) loan isn't a problem, the serviceability is 100% fine.
I'm also thinking that if I get into the IP sooner rather than later, I will pay an extra $7,800 rent in 12 months. But if my IP's capital increases by anything more than that amount, then I've made a profit in net worth. Also, gotta keep in mind I've got a little one on the way, so realistically I would probably stick with the cheaper rent for a least a couple of months after the wife pops (that's how child birth works, right? A little pop and then a bundle of joy? )
Anyway folks, sorry about the rant! Let me know what you think!