A quick question with a VERY long background. I hope people have the time to read this.
My wife and I bought an apartment at the end of last year and live in it as a PPOR. We're wanting to upgrade to a house in about 5 years time. We currently have about 200k of equity in the apartment (Assuming the price hasn't shifted since last year - we had 100k deposit and have since saved another 100k - about half of which came from cash wedding gifts. Unfortunately, we can't keep saving that fast. We can realistically put away about $50k a year on top of mortgage repayments)
We have been approved for, and can easily service another $500k loan.
You've all probably noticed the bipolar media the last few months - 30% growth over 3 years. 62% overvalued. Normal 8% growth returning. 40% crash coming. I give up.
My options is this:
1. Buy the house now. We'd look at about 500-550k. Rent it out for $480-$520 and claim about $9k of negative gearing for the next 5 years. Depreciation will probably add another 5k to that.
Basically a hedge against the possibility of price growth that will cost us about $100/week after tax.
2. Buy a $450k falling down ruin now. Lease it out for $320-$350. Demolish in 4 years, and build a home on the block of land.
Tax wise, it's almost the same.
3. Pay down our existing mortgage as much as possible, hope for a easing of prices (or at least no rises) and buy in 5 years?
Questions are these:
a) Are there other options I've missed?
b) Which would you choose if you were in our position?
Thanks for any opinions or advice that you can give.
My wife and I bought an apartment at the end of last year and live in it as a PPOR. We're wanting to upgrade to a house in about 5 years time. We currently have about 200k of equity in the apartment (Assuming the price hasn't shifted since last year - we had 100k deposit and have since saved another 100k - about half of which came from cash wedding gifts. Unfortunately, we can't keep saving that fast. We can realistically put away about $50k a year on top of mortgage repayments)
We have been approved for, and can easily service another $500k loan.
You've all probably noticed the bipolar media the last few months - 30% growth over 3 years. 62% overvalued. Normal 8% growth returning. 40% crash coming. I give up.
My options is this:
1. Buy the house now. We'd look at about 500-550k. Rent it out for $480-$520 and claim about $9k of negative gearing for the next 5 years. Depreciation will probably add another 5k to that.
Basically a hedge against the possibility of price growth that will cost us about $100/week after tax.
2. Buy a $450k falling down ruin now. Lease it out for $320-$350. Demolish in 4 years, and build a home on the block of land.
Tax wise, it's almost the same.
3. Pay down our existing mortgage as much as possible, hope for a easing of prices (or at least no rises) and buy in 5 years?
Questions are these:
a) Are there other options I've missed?
b) Which would you choose if you were in our position?
Thanks for any opinions or advice that you can give.