Will this work for us ...??

[Gabriel Conroy]

Wife and I plan to buy a Pprop valued at about $500 000. We own outright our current Pprop valued at $170 000. We have about $70 000 cash to put into the new house. Issue:Should we sell the $170 000 house and put the money towards the new house or rent out the house and use the income from it to service the new loan?
Further details:
1. I gross $64 000/annum, wife's gross is $30 000
2. Agent tells us that our current house will rent at $180/week.
3. We also own a premium vacant block worth about $500 000 (debt free) and are 'land banking' this. It costs about $4500/year to hold - rates/Ltax etc.
4. All property is in my name.

I have thought of selling the house to wife & we would then use an I.O loan to keep it. House has some potential as it is near a university in a growing regional town/city.
What do you think? Thanks in advance. Gabriel

 

[Qlds007]

Hi Gabriel

Sounds like you will be living in the new PPOP and therefore you want to try and elimate as much of the non tax deductible debt as quickly as possible. This could involve selling your existing PPOR in the open market and using the sale proceds to reduce the new mortgage or as you mention selling it to your spouse or Trust.

Unsure whether you have any dependants so the answer to this will need further consideration once additional information is to hand.

Stamp Duty will also be a consideration.

If you decide on the latter make sure you structure the loan correctly. You should be able to borrow upto 95% of the Transfer Value and this will reduce your PPOR loan.

Feel free to email if you need further advice.