What should I do next?

Hi all,

First time posting on PropertyChat, although have been a keen reader of the forum and the old SS forum (had posted there before). Just a bit of background, my wife and I own a PPOR and 3 IPs, all in Sydney. We started buying in 2008 and last purchase was in 2012, and have been sitting on our hands and putting money into offset accounts since. All our loans are IO (all standalone) and our PPOR is fully paid off (ie offset account filled up), while the other 3 IPs have <50% LVR. We are considering our next purchase in the next one or two years, and might also look at commercial properties for a change.

The questions I have are:

1. Should we pay off our PPOR loan altogether (we just refi last year, so there might be some fees for early pay off)? The reason for paying off is that it might help us with getting higher amount of loan in future. My broker thought that the total loan that we have is close to our limit.
2. I have read about investors buying 2-3 properties each year. How do they manage to get loan without hitting some sort of limit by the banks?
3. If we're to look at commercial properties next, is there anything to watch out in terms of getting loans? My understanding is the main difference is that a higher deposit is generally expected.

Apologies for the somewhat newbie questions. Still a lot to learn for me and my wife towards building a property portfolio.

 

If you can't borrow the amount you're after, then reducing or, even better, eliminating non-deductible debt (mainly your PPOR) may be the best way forward, yes.

As long as they pass the lender's servicing calculator and can put money down, it's sweet as bro

CIP is a different game than RES, far from just being a lower LVR thing. Plenty of info around in this forum and all over the web

Hope this helps?

Cheers,
Ethan

 

Thanks Rolf. Yes, I've been doing this previously but when I last did my refinance, my broker thought I should look to paying off the PPOR. I was a bit surprised as I thought the bank would look at money sitting in the offset equally to same money being used to pay off the principal. Does banks favour the latter and if so why?

How often do lenders reduce loan or want it repaid in full? This seems quite different to residential loan, although I recall some lenders hiking rates very fast during the GFC period to get out of the loan market.

Thanks Ethan, have started reading more on CIP.

 

A bit of different thinking here....

If your PPOR is worth bazillions (likely in Sydney), in theory you'd nearly be in a position to retire if you play your cards right and get good advice.

This post from @Terry_w is at the very least worth a read.
Tax Tip 147: How to Earn $95,000 pa and pay No Tax

Whatever you decide to do, you're in a fantastic position. Congrats! and good luck!

 

Best not to pay down non deductible debt if you can keep money in the offset instead AND you can still qualify for loans.

You don't give your goals so hard to make suggestions. If you want to 'retire' quickly the steps would be different to just wanting to accumulate more properties.

 

Yes, of course. That makes perfect sense.

Thanks, that is a good watch. Also a good reminder not to trust a valuation blindly and buyers should always do their own checks (in the case of the couple who bought the motel). The free version of the Four Corners is available here

Thanks hammer. Unfortunately, still have a young family and another 20 years of working life at least Thanks for the link, will have a read on Terry's tax tip.

Our goal is mainly to have a source of income when we retire (still some 20 years away at least). In the mid to short term, we are waiting for the opportunity to go back into the property market, have been waiting for things to cool off (could be a long wait). We do miss the times when we only have to compete with one or no one else when buying properties .

Hence, we are keen to be ready when the time comes for us to go back into the property market and have the right financial structure, eg whether to pay off the PPOR or not, etc.

 

considering buying in another state other than NSW...

 

Yes, that's something we are considering.