Your opinion please

[ALx]

Looking to buy a PPOR (Melb) and living in it 6 months to a year to make use of the FHOG.

my current situation

Salary (net) - $3920 p/m
Car Hire purchase Lease - $600 p/m (2.5 yrs left - $17k payout option now)
Personal Loan - $440 p/m ($20k left)
Savings - $8k
Credit card - none

With the above figures I have an estimated 200k available to me.

Option 1 -Now if I choose to consolidate the car lease into my personal loan ($720 p/m) this changes my estimated borrowing power to $235k

Option 2 -Or if I payout the car over the next year or so I'll have $260k available.

I'm itching to move outta home so option 1 is real tempting..

Would love some opinions

 

[Aaron Sice]

if you plan on keeping the car for at least 10 years then option 1 is what i would consider a reasonable scenario.

that said, i like to remove all non-deductible debt before buying a thing. basically, if a bank classes it as an asset on my application, i don;t want to be paying for it any longer.

 

[HiEquity]

Just my opinion...

Sell the car. Payout the car lease. Buy a cheap to run motorbike that you can park anywhere or a cheap to run car if you really have to. Use public transport. I know this will hurt but consider it a good lesson to not borrow money to buy depreciating assets and move on.

Use anything left over to pay down the personal loan. Sell anything you have to your name that you possibly can to improve your cash position. While you are doing this do everything you can to pay out the personal loan.

What do the numbers look like once you have done this? With that net salary you should be able to deal with the personal loan pretty quickly from then.

If you need to move out, consider moving out into a shared house / cheap rental and using the money to buy an IP instead and leave the FHOG for later. The rent and improved tax position will mean you can increase your property exposure over and above what you could with a PPOR. If you must buy a PPOR now then try to get an old place, with good land value, as close as possible to services etc etc.