How to structure our finance for next purchase.

Hi guys, just want to ask if anyone can give us advices how to structure our finance for next purchase (an investment property). I already acquired one property under my name(PROP interest only for next two years since I am living by myself).
PROP:
Interest rate 3.75% for next two years (560K)
Financial provider: ANZ (one offset account, home loan account and credit card account)

Recently engaged and planning to have wedding next year. At this stage, she has 20% deposit for a 400K property and a saving portion for the upcoming wedding. I am quite comfortable servicing currently home loan with my personal income. I opened up a joint account (ING and divert both our incomes to that account). Please advice if this is a good move or how can we structure our finance to acquire next property (my goal to purchase 2 properties next 3 or 4 years). I strongly believe a good financial structure will help us to acquire more properties in short amount of time.

 

Not a good move to have a joint account in some situations. for one you cannot borrow money from each other and charge interest and claim it.

see
Legal Tip 38 Spousal and Related Party Loans https://propertychat.com.au/community/threads/legal-tip-38-spousal-and-related-party-loans.1872/

For my version of the ideal loan structuring set up see
Terryw’s Ideal Loan Structure https://propertychat.com.au/community/threads/terryws-ideal-loan-structure.6016/

 

Hey Jack, welcome.

Whats the value of your existing property?

It usually makes sense to use equity instead of cash when available. For future purchases, you may have some equity built into your current property. Set up an equity release when available in a separate loan and use those funds as your deposit for any purchases (as opposed to your cash). Stick your cash into an offset (of a variable loan).

Most investors, use equity to build their portfolios over time. Its both tax efficient and usually much faster than saving.

You can utilise some clever finance techniques to accelerate the process to build the portfolio (e.g. valuation shop around when looking for equity if appropriate, order lenders in a strategic way to obtain more capacity, etc). Read a few threads on the forums here and it won't take too long to work out that using finance techniques is far more efficient way to build a portfolio than saving up cash.

 

Thanks Terry and Redom for your feedbacks. Here are few stats of my current situation:
Existing property (under my name and which we plan to live in for next 2 or 3 years):
Purchased price:: 581K in 2014 (off the plan)
Current loan amount: 560K (3.75% for next 2 year)
Estimated market price of the property:I haven't done the valuation of the property (just wonder if I want to do a valuation report, will this leave any mark on my credit file?).

I read Terryw's Ideal Loan Structure guide and I don't think it is applicable in my case.

1. My personal income: 120k/pa. (current saving: 5k).
2. Her personal income: 85k/pa (current saving: 100k).

According to my budget plan we can save around 4k per month (dual incomes). We want to acquire an investment property (around 400k) but not too sure how to set up the loan to benefit both parties.

 

No effect what so ever on your credit file. Best to get this done via a broker rather than DIY as we have access to valuation ordering systems for multiple lenders with varying reports such as desktop, kerbside and full vals . This is an art form in itself, val shopping that is.

You could consider using the 100k savings to "debt recycle" but get specific tax advise as already suggested to make sure it fits your specific scenario both current and future.

 

Why do you think it is not applicable?

 

Why don't you hit up a broker and get them to look over things properly for you? It's much quicker and easier than trying to get good advice over a forum.

They can do a valuation for you at the same time and get you on the right track. There's lots here on the forum who all know their stuff.