Guidance needed to look for an investment Property an loan

Hello All
I am an average middle class family member looking to buy a first investment property.

I am currently owning a house from last 3 years and house equity will give me around 10k.

I have also made an extra payment towards the house loan and got another $80k extra on offset account. I will keep $20k as emergency and withdraw $60k form offset account.

Total I can spare of $70 k for investment.I had a chat with few agent about investment property but they get me confused.Now the question is as follows.

1) Shall I fix part of home loan for 2 years?
2) I am currently in 3.98% Variable with 100% offset , Do I go to other bank and asked for better rate?
3) How does the loan for investment property will work? Do i first settle my existing home loan ( Refinance or change bank) and then look for loan for investment?
4) Shall I ask for combine loan (existing home loan + Investment loan)
5) What is the good place to buy a property in Melbourne ? What are you thoughts on apartment in city?
6) Invest in crowd funding property site or partner with some one?

Will look forward an reply from all of the experts.

Thanks

 

All 'up to you' answers

but don't combine the loans.

 

Speak to a broker who you will then use for loans and finance.

 

If you fix you will get more certainty over your repayments for the next two years but may lose flexibility. What do you prefer?

Depends, you can often get your current bank to put down your existing rate. Might be worth having a chat to a broker on this point.

If you were going to use two separate banks, one for the home loan, and another for the investment loan then you would generally want to settle the home loan first to keep things simple.

There can be advantages to this in getting a more competitive rate, but often the advantages are outweighed by the disadvantages. Should have a chat to someone to look at your circumstances and give you the options.

If only I had a crystal ball There are some buyers advocates on the form you could use if you are unsure about where to buy.

Up to you, but the general consensus is that investing with other people is hard.

 

Hi @HT1

As others have mentioned, combining loans is a bad idea.

Just taking money out of an offset account against your home loan to spend on a deposit on an investment property is not a good idea, because once you withdraw money from your home loan offset, you will be charged more interest and this is not tax deductible.

Normally a good broker would refinance your home loan in order to release equity for the purposes of using equity money for purchasing an investment property, which maximises tax deductibility of mortgage interest.

Tread carefully with things such as crowd funding as you won't necessarily get your money back.

The idea of buying an apartment in the city has been discussed many times and is considered to be a bad idea due to issues of oversupply of apartments.

 

I am in a similar situation. I have 60k in variable which is completely offset. I was recently suggested by a broker to transfer 59.5 k from offset to the loan account and then redraw. And then use that money for investment loan. Then it will be tax deductible. Is this correct?

 

Hello All

Thanks a lot for your time and comment. Will surely look forward into that.

 

I assume the loan is for your owner occupied property (not currently tax deductible)?

Technically the mount you redraw would would be tax deductible, but you should split that portion before redrawing (in fact split it before you move the money from the offset account). This is a very important step to ensure that it's clear how much of the loan is tax deductible.

 

@euro73 weren't you saying the outlay was only about 70k?

 

Rather than try to navigate the loan and tax deductibility issue by yourself, it makes sense to have a good broker do it for you. Two great ones have already responded on this thread (@Simon Moore and @Peter_Tersteeg ). Why not give one of them a call. It'll save you a lot of unnecessary confusion.

 

Hi Simon.
Do you know anyone or yourself will help me to look out for my option as a broker?

Will happy talk about this.

 

Hello All.

Is any one of you or anyone you know as a broker who is happy to have a chat and help me to look out for my option ?

Can you please suggest.

Happpy to talk about that.

 

@HT1 there are some forum rules (for good reason) that prevent us from spruiking for clients, but I think I speak for all (maybe most?) of the brokers on Property Chat when I say we would love to help.

 

Hello All

Apologise. Did not know the forum rules. I think it is good that we have that rule.

Thanks Simon for correcting.

 

@HT1 service providers cannot contact you unless you have made contact first. To gain a better understanding of the forum rules surrounding the topic, you may fancy taking a peek at item 19 of the forum rules which is here; Forum Rules | PropertyChat

Hope this helps