Starting over after 10 years lost in the wilderness!

Recently logged on to Somersoft again and realised with horror that I was last on here 10 years ago - where did the years go! Ten years ago I was building up to buying my first investment property but like many I never took that step. Here I am again, ten years, ten foreign countries and one marriage later!

I still have original PPOR which has become IP1:

Loan: $210K
Value: $400K
Equity: $110K
Rent: $450/wk

Starting full time employment Jan 2015, $55K/yr (probation period 6 months but hoping that will only be 3 months). Have $45K cash savings so with equity of $110K that totals $155K to get PPOR and IP2 in 2015.

Rough plan:

PPOR ~$400K
Costs ~$13K (includes $5K LMI)
Deposit $48K
Loan $352K
LVR 88%
My contribution ~61K (from equity in IP1)

IP2 ~400K
Costs ~20K (includes $5K LMI)
Deposit $48K
Loan $352K
LVR 88%
My contribution ~$68K ($49K from equity in IP1, $18K from cash savings)

That should leave me a buffer of $27K cash which I will offset against PPOR.

My reason for going to 88% LVR and paying LMI on the PPOR is that if I go to 80% and avoid LMI my contribution goes up to $87K which will leave me with no cash buffer at all - I will literally have to put in every cent of my savings. Paying $5K LMI seems to be reasonable for having a $27K buffer. (Also 88% LVR seems to be a breakpoint above which LMI goes up a lot)

Chances are PPOR will be less than $400K as I will look for something with value adding potential - I don't mind living in the middle of renovations. IP2 might be more than $400K as I want to look outside of Cairns, maybe Brisbane.

What would you do with 110K equity, 45K cash, income of 55Kpa gross and 450pw rent? Does this make sense? TIA
 
welcome back

sounds like you have built a life .......... nothing wrong with that

Nothing wrong with LMI either !

There may be some value to do some cashflow analysis on higher lvs for the PPOR, and/or IP.

If you can settle the PPOR earlier than the IP, put an 18 k extra loan split into it, so you can wash the 18 k cash to be used for the ip, and convert that 18 from non deductible debt to deductible.

ta
rolf
 
And...I just read this thread!

Welcome back! :)

You can ignore advice on splitting lenders and ING, didn't realise you were in new employment. Will need to go to NAB/CBA. So long as servicing is OK, both can go to the same lender (don't need to go to three separate lenders).

Probably NAB, given their calculator is a little bit more flexible and should allow you to borrow more. Or CBA first than NAB (if really tight).

Cheers,
Redom
 
Time flies when you are having fun.

WHy not structure things in a way to reduce the LMI and loan on the PPOR and maximise it for the investment loan. more tax effective.
 
Redwing,

Probably been worked out as below

Value- 400k @80%LVR = 320k

320k - 210k Loan = 110k equity @ 80%

Cheers
Coota
 
Two thoughts to reduce your LMI payment.

1. It's quite often stepped. 87.9% instead of 88% may reduce your LMI rate. It's worth checking.
2. If you have room on your credit card and the ability to pay back quickly you may be able to increase your deposit.

I've used these two together successfully many years ago. I don't know if the rules have changed.
 
Sounds like you've had a busy 10 years!

Looks like have a good plan there. Sometimes paying a few extra grand to have that SANF cash buffer is worth it.

Is there a chance your new PPOR will become an IP in the near-ish future?

If you draw on equity on existing IP up to ~88% as opposed to 80% that will give you a bit more to play with and preserve some more cash. If used towards IP2 purchase then the new LMI could be deductible too. But of course, get tax advice with this!

If anything, I would put my cash into PPOR deal and leverage IP purchases with minimal cash to make the most of tax deductions.
 
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