Have you consider putting it in offset account instead? Same effect as redraw but more flexible.
It depends
All things being equal, I always go for house (land).
to renovate or keep equity to buy a rental property??
- Thread starter rookie101
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All things being equal, I always go for house (land).How bout having your cake, AND eating it, too?
Renovate the house, then with the increased value, withdraw up to the new limit and buy an investment property with the now tax cdeductible debt portion.
Win win.
$30,000 off the PPOR loan saves $100k in interest, BUT, you don't get the continual growth that the leveraged IP can offer. Long term you will end up like most other retirees, own their own home but have no cash-flow.
Whereas with the investment, who knows how many hundred thousand you can make over a lifetime.. I don't know how old or young you are so can't comment there.
But the thought of a doubling of property values every 10 years or so the picture looks like this.
yr/1 300k and tax savings
yr/ 10 600k and pos cash-flow
yr 20/ 1.2M and pos cash flow
yr/ 30 2.4M and pos cash flow.
PLUS your own home, throw in a further 2.5M
Hmmm, which one would work out better...
Renovate the house, then with the increased value, withdraw up to the new limit and buy an investment property with the now tax cdeductible debt portion.
Win win.
$30,000 off the PPOR loan saves $100k in interest, BUT, you don't get the continual growth that the leveraged IP can offer. Long term you will end up like most other retirees, own their own home but have no cash-flow.
Whereas with the investment, who knows how many hundred thousand you can make over a lifetime.. I don't know how old or young you are so can't comment there.
But the thought of a doubling of property values every 10 years or so the picture looks like this.
yr/1 300k and tax savings
yr/ 10 600k and pos cash-flow
yr 20/ 1.2M and pos cash flow
yr/ 30 2.4M and pos cash flow.
PLUS your own home, throw in a further 2.5M
Hmmm, which one would work out better...
