Suggetions to get out of a pickle

[Fergus]

I would be apprciative of any suggestuions people may have

My Wife Iand I have 3 I/P and 1 PPR. Our I/P are from us upgrading our PPR and keeping the houses We knew it was going to be a stretch to keep all

It has come to our PPR and daily living loans have jump from 250k to 380k over the last 6 years .

It Looks as though the only way out is to sell one of the I/P to reduce these personal non fixed loans.

Of the I/P my wife owns 5acres with small house owing 235k value 435k rent at 235.00 p/week

My houses inner city 150k loan rent 350.00 value 600k (prefer not to sell )

Next one in my name 250k value 450-500k rent 370.00 p/week. (I bought my spouses half of this and has been under 6 years since we moved out so CGT Exempt) .
The investment properties are fixed @6.99 PPR 7.25% personal loan current variable rate
My delemia is which one to sell I am thinking the one in my wifes name as This would allow us more cash flow from rents etc. I think we have got ourself into a pickle and kids school fees are getting bigger would appreciate any suggestions or any other ways out that I may not be aware of......

 

[Dazz]

Morning Fergus,

Getting out of a pickle is always going to be tough. By definition one cannot extract oneself froma pickle without pain, whether that be financial or lifestyle pain.

I gather from your suggestions, you'd rather go down the "financial pain" path, probably cos it's less painful.

Could I suggest a few "lifestyle pain" remedies, which will be far more personally painful for you and your family, but might result in you coming out financially way in front.

On the Offence Side ;

O1. Pick up a second job.
O2. Do a night course and increase your primary income.
O3. Have the wife bring in some income.


On the Defence Side :

D1. Cut up the credit cards.
D2. Say NO sometimes to all of the irrelevant commercial cr@p everyone buys.
D3. Change your transport usage.


Any or all of these things, especially D2, may help to allow you to keep your current assets.

 

[alexlee]

With that much equity in the inner city house (assuming your valuation is correct, because that's a pretty low yield) there must be something you can do about refinancing.
Alex

 

[Rolf Latham]

Hiya

As suggested, there may be some other ways to get thu this pickle.

if u do sell, see if u can structure the loans so you do a substitution and keep the lower fixed rate ones..6.99 is a nice rate in the current climate !


Your broker or banker should be able to help you with this.

ta
rolf

 

[marg4000]

You mention that your own a PPOR and 3 IPS.

You also state that one of your IPs is CGT exempt as you bought out your wife and it is less than 6 years since you moved out:

"My Wife Iand I have 3 I/P and 1 PPR."

"Next one in my name 250k value 450-500k rent 370.00 p/week. (I bought my spouses half of this and has been under 6 years since we moved out so CGT Exempt) . "

As you have a PPOR, this IP cannot be CGT exempt, so don't let that false assumption cloud your thinking.
Marg

 

[wylie]

We have been in the same "pickle" before. Several months ago, we toyed with selling one of our IPs to totally remove all PPOR debt and reduce the IP loans. This would have given us the ability to build in the back yard of an IP and/or buy again.

I just couldn't see how we could keep the IPs we have without changing our lives, eg. me get a job (don't want to do that) or selling something.

After speaking to our friend/loan broker, he suggested we keep our PPOR debt and borrow to prepay some interest. We, of course, ran it past our accountant who knows our affairs very well. It has meant we keep everything, which in Brisbane's current market, I am very glad we did.

We locked our interest rate for two years, so it also means we have to ensure we have the funds available in June for the next prepayment.

Of course, this only is viable while the value of our assets grows more than the loan we used to prepay the interest (which is the case right now). It is a stop-gap measure, and we will need to review it before we come off our fixed interest in July 2009, but I am a bit of a risk taker anyway, so happy with our decision.

I am sure that this is not for everyone, but it suits us.

I would see a broker and see if you can keep all three IPs, at least while the Brisbane market is moving along like it is (assuming the IPs are in Brisbane).

 

[redsquash]

You mention that your own a PPOR and 3 IPS.

You also state that one of your IPs is CGT exempt as you bought out your wife and it is less than 6 years since you moved out:

"My Wife Iand I have 3 I/P and 1 PPR."

"Next one in my name 250k value 450-500k rent 370.00 p/week. (I bought my spouses half of this and has been under 6 years since we moved out so CGT Exempt) . "

As you have a PPOR, this IP cannot be CGT exempt, so don't let that false assumption cloud your thinking.
Marg

Determine which is your PPR. It isn't the place you live in. Its the place you say to the ATO is your PPR.
When does the 6 year rule finish?
what's your cash shortfall?
Are the loans interest only?

 

[Fergus]

Thanks Guys for thw suggestions

The 6 year finishes Sept this year . The ppr for ATO is the house We are living in at the moment . Yes the investment loans are Interest only. The idea was to pay of PPR and the personal loans to get rid of the non deductable interest payments.
Maybe I am confused about the 6year CGT period . I was under the impression I could claim it now and defer payment of the 6 years until I sold my current PPR and then pay it off the sale of this property which should be diluted as we intend to stay here for a long time..??

 

[skater]

You said that you would prefer to sell the one in your wife's name. That would be the one sitting on 5 acres? Is it possible that this land could be subdivided, either now or in the near future? If so, then I strongly suggest that you hang onto this.