House rendered

Thanks I will have to take a look at that.

 

Nah, it's a little confusing, I'll try to find some actual advice in one of the books here so I don't mix up the message. Hopefully some will add to @SK Investments advice.

 

I reckon your broker will have it covered

 

Yes I'm confident he knows what he is doing and will setup my loans to benefit me the most.

 

Great point Azazel - it often does make sense to do this from a behavioural perspective, but there can be a borrowing power cost associated with having this debt.

Your suggestion does make sense to get rid of debt quicker as the shorter loan terms force higher repayments and thereby removes the debt quicker.

However, for someone accumulating properties, the repayment thats being made over a shortened time period is likely to be considerably larger than what the bank assesses it to be on a home loan. So the finance effect is that it can be a barrier on your borrowing power.

For someone at the beginning of an expansion plan and looking 'squeeze' as much borrowing power out as possible, that can make a pretty big difference.

Using some numbers:
Personal loan repayment of $800 p/m on a $50k loan.
This reduces your borrowing power by around $120k. So the multiple is more than 2.
If you'd added this to your home loan, your borrowing power is reduced by $50k (because you've increased your debt by 50k). The repayment becomes considerably lower too, hence the additional borrowings.

If you're concerned with keeping the loan and the behavioural impacts, there's no reason why you can't do it in a separate split loan (as SK mentioned), and pay that loan down faster as it was taken out for personal reasons (e.g. car, etc). Just keep the contracted repayment as low as possible if you want the borrowing power benefit, and exercise discipline to pay that part down.

Cheers,
Redom

 

Good stuff, I knew they'd be a more knowledgeable person to explain it than myself regarding this numbers malarkey.
Cheers Redom.

 

Whats bagging? Had a search and it seems like rendering to me is it just using a bag mix?

 

Its a skim Coat of a mortar mix, applied with a hessian bag or similar and is a rougher finish. It would be a lot easier to diy bagging than rendering

 

Hi @Brian84 ,
I'm wondering if the increase of $255,000 ($700,000 - $445,000) is just from renovating the following as you listed in beginning of the thread?

1. House rendered
2. Roof repointed & painted
3. Motor garage door installed
   
4. Fascia cover, gutters and downpipes installed

I am also in the process of doing similar to yours, except the last two points with garage door and fascia parts.

Thanks!

 

What's the cost of renovation?

 

Yeah @Brian84 what was the total cost of reno again?

 

Sydney would have helped push things along too

 

I got $11,300 from what @Brian84 posted at the beginning of the thread. Otherwise, it cost more than that.

Does it mean equity increase of $255,000 from the renovation cost of $11,300? In terms of timeframe, the whole process took about 1 month? The thing we don't know here is the valuation just before the renovation.

 

Go to re.com.au and check the sold properties nearby and find the ones similar to yours you should be able to see where it sits

 

The thing is I don't know where @Brian84 's PPOR is.

 

Sorry thought you meant your place.
That work done wouldn't have increased it that much I hate to tell you, that's the sydney market making most of the growth

 

What was your process for this?

 

-Tape up all areas you don't want painted.
- clean all aluminium you are going to paint and make sure there is no dust or dirt on it.
- get spray cans colourbond touch up spray cans.
- spray light coats of the paint rather than try and cover the whole window in one coat. Do about 3or 4 light coats. This will prevent runs in the paint.

 

My ppor is in prestons near Liverpool in sydney

 

Did you have those Diamond fly/security screens?