Advice on current situation.

Thanks. I personally find it hard to save with no specific goal. Maybe just aim for $30,000 in the offset by Christmas...
I'll have a chat to a broker to get an idea on where i need to be financially to be able to get an investment loan.

 

That car loan at 8% will be crippling your borrowing capacity.

Pay that down before concentrating on building up more offset balance. The money in offset plus your 15K top up is not enough to get you a deposit + stamp duty for even a 300-350K property, and right now it's only saving you interest on 23K @ 4% over 30 years. ie $920 per year. The car loan is at 8% over far fewer years and I bet it costs much more than $920 per year???? Forget the offset for the time being. Attack the car loan.

 

As it's all non-deductible debt, I'd almost be inclined to roll the car loan into the mortgage on a split loan (so it's all at the most competitive rate but also means you're paying for the car until you're 55 and long after you've sold the car). Then save like nothing into the offset including putting all of your pay into this account.

 

This will greatly help servicing as lower rates and much longer term.

 

Car loan needs to go. Youre only 25! Youre already in a great position. Congrats! I wouldn't worry about investing untill that car loan is gone. Smash that loan first and whilst youre waiting, read as much as you can.

You made a very good call by coming to this forum.

 

They have already completed the maximum top up available to them.... 15K top up... the valuation has just be done. There is no room for rolling the 37K loan into the mortgage. They're already at 89.65% LVR . Certainly take the 15K and reduce the car loan to 22K...by all means. But their capacity to roll the entire 37K seems to be some time away

 

Thank-you everyone.

I got a quote back from the finance company this morning with a payout figure of $33,621.42 (Total $32,911.99 outstanding) and the interest rate appears to be 7.4%.

 

There's $15k (I'm assuming undrawn) sitting in the top up plus $23k in offset which more than covers the outstanding car loan - possibly use $15k from the top up plus the additional $18k from the offset to pay out the car.

 

@Famil Man - with $140k gross, you'll need to start looking at getting some knowledge about setting budgets, putting $ aside for specific requirements and some tax minimisation strategies (I know that you're young but $100/wk salary sacrifice into super will be concessionally taxed compared to your current tax rate).

 

I tend to agree with the budgeting suggestion.

With the OP's high income, I would be expecting the offset balance to be increasing not sitting at $23,000 'most of the time'.

Even with only one partner working; the kids are little and shouldn't be costing much at this stage.

 

Clearing the car loan can be a great first step - but one thing a lot of people forget is don't get another one. If you can't rely on not using that freed up capacity for only investment use, it can sometimes be better to take the hit, pay down the IP and recycle the cash out as an investment property deposit and make the purchase while you can.

There's the route which is the most effective structure in theory, and then there's reality. Just make sure whatever you end up doing, that you follow the course to ensure you get the full benefits of your hard work.

Otherwise a healthy position to start working towards building a portfolio.

 

Check with any broker you approach if they actually have time to work with you. There's a lot of demand for brokers at the moment. Not everyone is good at saying no when they haven't got time to take on any more clients. Leaves you sitting around waiting. It would be better if people could just say if they're too busy, but if not best to get a clear opinion on can they look at your file, and timeframe.

 

Hello all,
I'm back. I received alot of good advice back in Aug and it has taken some changing of thought processes but i am ready to get my act together.

To do this i need to know the best way to acces the 15k topup from the mortgage to pay onto the car loan (currently down to 18k). I should have done this back in Aug when the advice was provided but better late than never.

So how can i access this money without turning my loan into a mixed loan. I want maximum deductability in future for the home loan.

Ainsley

 

Where did the bank place your top-up funds?

Regardless though your home is already non deductible debt so using the money even if from redraw is not going to have any negative effect.

It would only ever become an issue down the track if you later turn your PPOR into an investment property.

 

This was my thinking, this place will definitely be rented out in the future.
I did not think i had a choice at the time utilizing a 'top-up' but the 15k was added to the homeloan (redraw assume)

 

You will need to refinance and split the loan. Into the relevant portions.

 

Depending which lender you're with you may just be able to split the loan with a form - not necessarily a full refinance.

 

Can you explain this pls TerryW? Not sure I understand.