Advice needed...what to do now we have no non deductible debt?

Hi there,

So we are a little lost with what our next move should be. A little bit of a run down on our situation...

- PPOR is recently cost neutral (we have the money in an offset account)
- we have 3 other mortgaged investment properties owing

- $624k (80(husband)/20)

- $419k (50/50)

- $359k (50/50)

-My husband is a high income earner (250K+) and I am a stay at home parent
- we would like to build (or buy again) in 12 - 18 months or sooner and want to be able to access these funds at short notice if need be

Now that our home is cost neutral what is the best thing to do?

Our initial thoughts were to put additional money into a savings account in my name, however the highest interest rate we can find is around 3% or refinancing and getting an offset in place against one of the investment properties.

I am also wondering if it is feasible to split one of the investment loans somehow so I was able to pay down my half which currently has no immediate deductibility benefits whilst maintaining deductions on my husbands 50% ownership? Is this something that can be done? If so, how do I go about it?

Could anyone offer other suggestions?


Thanks so much

 

Great position to be in.

Bunch of options:

- invest personally in other asset classes outside of housing. Seek yield in your name (tax is low) or growth in hubbys (lower yield usually, tax person will pay a share of it for you). If yield investing, good for cash flow, although that may not be particularly useful given the high incomes - but will depend on goals/planning. Growth/wealth accumulation may be the name of the game in your situation with high incomes already in place.

- increase resilience further (depending on your view of the market and growth cycles) and pay down debt. It should earn you more than cash investing, as your interest rates will be above cash on the loans. Just stick funds in the investment offsets now (so you will have access to it later).

- increase lifestyle/buy your time back. Sure this may not be long term prudent, but it would depend on your plans/goals/future expectations. The rewards of hard work and being in a good position deserve to be fulfilled - may be worth considering (again, depends on your plans).

 

If only you had a property in your name only. You could just build up the offset account on that. In the meantime I would suggest saving in the offset of one of the 50/50 owned properties would be better than earning a lower rate in a savings account, but you could do the sums and see.

 

Hi Redom
Thanks for your response.
When you mention "invest personally in other asset classes outside of housing. Seek yield in your name (tax is low)".
What other asset classes should I look into and what sort of yields are out there?

- "Just stick funds in the investment offsets now (so you will have access to it later)"
I have asked our bank (CBA) if it is possible to add an offset account to our investment loans but they say it is only possible on a home loan.

- "increase lifestyle/buy your time back." This is the long term goal but want to upgrade our PPOR first.

 

Yes if only we had the knowledge and foresight to have set it up in my name only!

 

We would love to bring forward but need to build up some more savings first.

 

This is not correct. A borrower can have an offset account on an investment loan with CBA - as long as the loan is not fixed

 

It could just be me but I would want to be 1) Paying down debt to give yourself a buffer from life changes 2) Placing money into superannuation 3) Saving an emergency fund and 4) paying down debt

 

Get some offsets attached to those investment loans - CBA certainly does offer this for the standard variable investment package products - so you won't be able to if they're fixed or basic products. If on the basic just get them switched to the SVR product.