Young, keen investor looking for advice!

[mech81]

To tell you the truth Rodion, QLD is a rather big state and the media only covered the flood ridden states. Even within Brisbane which looked bad in media, I can tell you 75% of where my friends stayed in Brisbane were untouched.

Its nice to see that perspective has stayed almost half a year after the floods. I hope that perspective stays abit longer for me to pick up something. I really like brisbane as a city.

 

[wobbycarly]

Man I guess its only me, but from what I saw on the news it doesnt sound like its only hit just afew areas. The whole of the Queensland got under water mate. I sound a bit over the top but it is the case mate, I wouldnt want to live there ever... I dont know who else would.

Little bit of research might help.

A lot of people were impacted, but only a small part of Queensland was underwater.

 

[renovation]

WHERE would you buy x2 $200k properties in victoria?
2 - eggs and baskets.

 

[Barletta]

So I've been to the bank and found out more about offset loans, and apparently I can't lock the interest in, it has to be variable only. So I'm thinking of splitting the loan, so that a portion is locked interest and the offset part is variable. Has anyone else done this?? I've bought the API magazine today, so I'll read that tonight/tomorrow. I'm very keen to finish it.

 

[Rolf Latham]

So I've been to the bank and found out more about offset loans, and apparently I can't lock the interest in, it has to be variable only. So I'm thinking of splitting the loan, so that a portion is locked interest and the offset part is variable. Has anyone else done this?? I've bought the API magazine today, so I'll read that tonight/tomorrow. I'm very keen to finish it.

Have a chat with an independent mortgage broker. Most can get you a loan that is ALL fixed AND has interest only, AND has 100 % offset, assuming thats what you need and you know why you need it

ta

rolf

 

[Barletta]

Have a chat with an independent mortgage broker. Most can get you a loan that is ALL fixed AND has interest only, AND has 100 % offset, assuming thats what you need and you know why you need it

ta

rolf

Yea Ive been dealing with an independant broker but they told me an offset account is variable only. I don't think I'm going to lean towards an offset account anyway as I want to pay more interest, as I can get more money via tax that way.

 

[locko24]

Yea Ive been dealing with an independant broker but they told me an offset account is variable only. I don't think I'm going to lean towards an offset account anyway as I want to pay more interest, as I can get more money via tax that way.

Come again? You want to pay more interest?
How much did you want to borrow ?

 

[jaycee]

Yea Ive been dealing with an independant broker but they told me an offset account is variable only. I don't think I'm going to lean towards an offset account anyway as I want to pay more interest, as I can get more money via tax that way.

Barletta,

The offset account is a savins account.
The mortgage is what wil be either Fixed or Variable.

As Rolf suggested, broker's can help you get a mortgage on frixed rates & allow you to use an offset acocunt linke dot it.

I think yuo might want to go over the idea of what you're wnating to ahceive.

YOu suggested maybe paying principele & interest - our suggestion was tat's fine, but if you put t6he $$ into an offeset instead o finto the mortgage itslef, you end with the same effect.. but with more flexibility for you...

If you pay the loan down, you will pay less interest

If you pay the same amount of money into offset, you will pay the same amount of less interest.


You can pay extra interest if you like, but what are you going to do with the spare $$$$ that you originally were going to use to pay off your mortgage ?

 

[nucence]

Barletta,

Your young and have enthusiasm which is great, but you need to do some research to save you some dollars and pain down the track.

By having an offset account, this is effectively a savings account whereby you can have any surplus money stored and it can be used to pay less interest on your loan.

If you had accumulated $20k in the offset account in 1 year you could withdraw that money to go on a holiday, buy a car or purchase ip #2.

Ask yourself what will happen if you put all your surplus money into the loan, how do you get access to that money?

 

[Rolf Latham]

Yea Ive been dealing with an independant broker but they told me an offset account is variable only.

That may be true for that broker. Not all either have access to, or have the knowledge of loans like the Adelaide Bank fixed rate loan with 100 % offset.

Unless you will sell this property one day, OR live in it till you go to your retirement home, an offset facility with an IO loan will give you much increased flexibility

ta
rolf

 

[jaycee]

That may be true for that broker. Not all either have access to, or have the knowledge of loans like the Adelaide Bank fixed rate loan with 100 % offset.
Unless you will sell this property one day, OR live in it till you go to your retirement home, an offset facility with an IO loan will give you much increased flexibility

ta
rolf

Hey, this sounds familar.....

 

[ZEUSvsHADES]

doing good mate, its great to see more young investors

I'm not sure about all interest only loans but the ones I have its interest only for the first five years then 25 years of p&i so in total 30 years. Which is extremely helpful because the money your not paying for principal I feel is better invested in more property, and principal payments are not tax deduction s either

 

[jaycee]

doing good mate, its great to see more young investors

I'm not sure about all interest only loans but the ones I have its interest only for the first five years then 25 years of p&i so in total 30 years. Which is extremely helpful because the money your not paying for principal I feel is better invested in more property, and principal payments are not tax deduction s either

My loans are the same.. I have since renewed 1 of them already at the end of the 5 yr IO period instead of reverting to P&I

 

[ZEUSvsHADES]

My loans are the same.. I have since renewed 1 of them already at the end of the 5 yr IO period instead of reverting to P&I

oh wow, I didnt know that. I will have to remember it, thanks heaps

 

[Aaron_C]

oh wow, I didnt know that. I will have to remember it, thanks heaps

Well you can refinance into another 5 year IO after that time hopefully

 

[Barletta]

Come again? You want to pay more interest?
How much did you want to borrow ?

Yeah sorry, I think I've forgotten some of the basic stuff now that I've learnt and learnt alot of things. Sorry for the foolish question, but I've forgotten why exactly do I want the bank to own it, and not pay it off? I was thinking that, the more interest I pay, the more I get back at tax. While this is true, I've realised that it's stupid, otherwise I would've gotten a loan fixed at 10% or something silly like that. So yeah, could someone please get me back on track?

 

[Aaron_C]

Yeah sorry, I think I've forgotten some of the basic stuff now that I've learnt and learnt alot of things. Sorry for the foolish question, but I've forgotten why exactly do I want the bank to own it, and not pay it off? I was thinking that, the more interest I pay, the more I get back at tax. While this is true, I've realised that it's stupid, otherwise I would've gotten a loan fixed at 10% or something silly like that. So yeah, could someone please get me back on track?

It's good to borrow as much as you can, not to pay interest and get tax deductions, but to give you as much working capital as you can while limiting how much of your own money that you put in. That's the secret to investing/generating wealth - using OPM (Other People's Money). Warren Buffett does it - and so does everyone else.

 

[jaycee]

Yeah sorry, I think I've forgotten some of the basic stuff now that I've learnt and learnt alot of things. Sorry for the foolish question, but I've forgotten why exactly do I want the bank to own it, and not pay it off? I was thinking that, the more interest I pay, the more I get back at tax. While this is true, I've realised that it's stupid, otherwise I would've gotten a loan fixed at 10% or something silly like that. So yeah, could someone please get me back on track?

When you start, you cant afford to pay cash for an inestment outright usually, so you borrow.

You're allowed to claim your costs against the income (rent).. and usually the cost aremore than the rent, and so, you get some of those extra costs back from the tax you paid that year - great, it means its affordable to buy an investment property.

But nest year, the rent iwll go u p& te expenses wil stay the same - guess what, the expesnse after rent aren't so high... and so you will roughly get a bit less back from your tax return...

If you pay the loan down, or put $ into offset, this reduces the epxense you pay and so it might cost you even less again after rent

But that's ok !

When you get to the stage where you have enough money left in your normal pay etc, you can now afford to buy another investment....!

 

[locko24]

Paying a place off is the same as putting your money into a savings account. No-one ever got rich by saving! (Not to say saving is a bad habit to get into)

 

[travelbug]

I was thinking that, the more interest I pay, the more I get back at tax. While this is true,

Only the interest is tax deductible so if you pay more (as in P&I) the tax deduction is still the same.