Looking to upgrade the family home and wondering do I keep or sell my current property. Combined income of $85,000 year. ( Little more when both full-time down the track ) Current property worth $350,000 with mortgage of $190,000( would rent around $350 per week. ) The property we would like to buy would be around $500,000 Would you keep or sell the current property and why?
I assume what you are asking is whether to sell your current family home or convert it to an IP. My reasoning: You don't have a lot of income to pay off a PI mortgage of $400k+ on a property that won't be bringing in any income. Part of your income is not secure as at least one of you is part time and I assume casual. You don't say how much deposit you have for the new house so I assume not much. I assume you plan on remortgaging your current house to 80% for much of the deposit and that will release $90k. At the end you will have an IP that is at best cash flow neutral and a larger mortgage to pay on the new home. $850k of property with $670k of debt and much of the interest won't be deductable. That said I am a bit financially risk averse especially in the current economy.
There isn't enough information to be able to make an informed decision. What are your long term objectives? What are the growth prospects for the existing property? Do you need the capital to purchase the new property?
Considering you only owe 190k, that is all the debt that will be deductible against the rental income. The further 90k you borrow for your PPOR will not be deductible, as the deductibility is assessed on what the funds are used for, not what they are secured against. Without knowing the location of the property, your current financials and your long term goals, not many if any members here will be able to give you informed concise advice.
On that income I'd be inclined to stay where you are hey. An income of 85k pa will make things tough. I'd work on your income first, then get another property. Congrats on paying off a big chunk off you home too BTW! Good stuff!
1. Can you service? Both loans? If not then you won't have much choice. If you can service both you have many potential strategies to consider
