Hi all,
Was wondering whether I could get some advice from all the pro's out there, I've been interested in investing in property for about the last 2 years and have read countless threads in the last 12 months here on Somersoft, so feel like I have a pretty good idea of what to do, but thought I'd lay it all on the line here and see what people think.
I have a reasonable salary for my age (~$100k for 23 yr old) and have saved up roughly $25k (5% plus fees) for a deposit on a property in perth around the $300k mark.
I've had meeting with a family friend who is a broker and works for a reputable home loan firm who suggested I go for a P&I loan even though the property will be an IP from day 1, in order to lock down some equity for when I look at buying another property in a couple of years.
From what I've gathered on this forum, wouldn't it be better for me to go for an interest only loan with an offset account, putting all my extra cash in the offset account to decrease interest repayments. Then in the future I can simply use this money in the offset account as a deposit and the whole IP loan will still be deductible no matter what I use the offset money for?
My broker has suggested that if I need a deposit, simply redraw the amount from the P&I loan and use that as a deposit, but if I bought a PPOR with that money, wouldn't that mean only a portion of the IP loan would now be deductible? Also that wouldn't that be introducing cross-collateralization?
I trust this broker as he has spent all his career in the banking industry, but a little voice is nagging in the back of my head telling me this isn't right..
If anyone could comment or give any suggestions it would be much appreciated
Was wondering whether I could get some advice from all the pro's out there, I've been interested in investing in property for about the last 2 years and have read countless threads in the last 12 months here on Somersoft, so feel like I have a pretty good idea of what to do, but thought I'd lay it all on the line here and see what people think.
I have a reasonable salary for my age (~$100k for 23 yr old) and have saved up roughly $25k (5% plus fees) for a deposit on a property in perth around the $300k mark.
I've had meeting with a family friend who is a broker and works for a reputable home loan firm who suggested I go for a P&I loan even though the property will be an IP from day 1, in order to lock down some equity for when I look at buying another property in a couple of years.
From what I've gathered on this forum, wouldn't it be better for me to go for an interest only loan with an offset account, putting all my extra cash in the offset account to decrease interest repayments. Then in the future I can simply use this money in the offset account as a deposit and the whole IP loan will still be deductible no matter what I use the offset money for?
My broker has suggested that if I need a deposit, simply redraw the amount from the P&I loan and use that as a deposit, but if I bought a PPOR with that money, wouldn't that mean only a portion of the IP loan would now be deductible? Also that wouldn't that be introducing cross-collateralization?
I trust this broker as he has spent all his career in the banking industry, but a little voice is nagging in the back of my head telling me this isn't right..
If anyone could comment or give any suggestions it would be much appreciated