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best way to structure this loan

Discussion in 'Property Finance' started by propertyhut, 5th Jan, 2016.

  1. propertyhut

    propertyhut Member

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    Hi All,

    I have recently sold my current prop and bought a new one. situation.

    i have roughly 850k with me, new prop is for 1.4 m

    i plan to live there for long, but never know what future holds and might then rent it out in future.

    what would be best way to structure the loan/mortgage.

    was thinking just to put 20% deposit and rest sits in offset account. but that way P&I repayments would be very high right, as loan amount is also high.

    any suggestions on best way to go about it.

    Regards,

    propertyhut
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    80% LVR IO with 100% offset.
     
    neK, Jess Peletier and York like this.
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Agree with Terry.

    Uncertainty means you need flexibility - variable interest only with offset will provide that.

    Cheers

    Jamie
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Actually, 105% would be ideal. Do you have another property?
     
  5. propertyhut

    propertyhut Member

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    no i dont have another property. but with 80% loan, confirming my repayments would be like
    loan amount: $1104000
    so my fortnightly repayments will be $2119 right...? or it will be lower because say I have roughly 576k in my offset account.
     
  6. Blacky

    Blacky Well-Known Member

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    Even if he doesnt, he has $2250m of available security ;)
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Assuming your interest rate is 5%. Loan amount is $1,104,000 less $576,000 in offset = $528,000

    $528,000 x 5% = $26,400 annual interest repayments. or approx $2,200 per month.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes PH could still borrow 105% by using the old term deposit trick.
     
  9. Blacky

    Blacky Well-Known Member

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    By my maths borrowing $1,460,000 will come to about $3,000/month ($1400/fortnight) (interest only).

    That is
    $1,160,000 @5% secured by property = $58k
    $300,000@2% secured by cash deposit = $6k
    Total interest bill = $64k

    Offset $550,000 against property = -$27k
    Net payment $37,000/12 = 3k.

    Blacky
     
  10. propertyhut

    propertyhut Member

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    thank you all. my mortgage broker comes in next week. this week his loan packaging assistant is doing number crunching.

    their response is that even if I have say 500k sitting in my 100% linked offset account, i would still need to pay:
    Total Loan Amount: $1,104,000.00

    P&I repayment $5,296.16 per month.

    Interest Only $4,066.00 per month.

    if that right, I thought by having money in offset account, I would have to pay lower.

    thanks.

    propertyhut
     
  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    not quite right : )

    the PI bit likely is, but the IO isnt

    unless if course your loan isnt a 100 % offset

    ta
    rolf
     
  12. Greyghost

    Greyghost Well-Known Member

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    Exactly.