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Age old question with a twist deposit or debts? Help!

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Jen | 10 Nov 2013, 08:15 AM Agree 0
Help Needed. Currently living with parents and have the opportunity to either save for a deposit for a Ppor (which we intend to rent out for a year) or pay off $36k debt and then save. The twist... We want to start a family. Bank won't lend while I'm on maternity leave and I'm not sure I'd go back full time immediately after baby - drastically reducing our borrowing power. If the Ppro is rented out for a year with me part time we could afford to service the debts and the new home loan even with me on part-time the catch - still living with parents.

Additional Info:
We have an investment property however it's worth $20k less than what we purchased it for so selling seems to be a bad idea at present - it's negatively geared.
We have no dependants and I am not currently pregnant
Maternity leave is paid half wage for 6 months or full wage for 3 months
We both work full time with good careers household income $150k
Feel time is running out to start the family
If we ask the banks they say save and borrow now
If we ask the parents they say grandchildren now!

We just needs some independent unbiased advice.

Please any advice?
  • Daniel Shillito | 21 Jan 2014, 11:51 PM Agree 0
    Hi Jen,

    Ok, here is some unbiased advice for you (I dont work for any property companies or banks however I do provide advice for a living).

    You are asking for financial advice. You are looking for a financial plan.

    I am afraid that asking such detailed questions with lots of specific information on a forum like this.. well, its like going to the pub on Friday night and asking around. You could get plenty of advice but how do you know if you can trust it.

    *whether you fall pregnant and start a family is a very personal choice - is that more or less important than getting into your own home quick?
    If you focus on other things will you regret not starting a family earlier, in the future?

    *my wife and I found that once pregnant, the urge to be in our own home, increased.

    Here's some general advice:
    Banks will lend today on income today. Its clear if you are pregnant and/or starting a family soon, your borrowing power is much reduced. If you borrow and later were to fall pregnant.. as long as you continue to meet mortgage payments there is no significant issue - if your family plan is advanced when you apply for a mortgage, you should advise the bank of this fact.

    Your investment property? The key here is not what has happened since you bought it, but what are the prospects for the property for the next 10 years? If the answer is not positive due to factors that I can have no idea about (without knowing the facts) then perhaps the fact its valued today at lower than what you paid is the least of your concerns. Herein could be an answer.

    For more specific advice I suggest you see a financial planner - one that is willing to listen and potentially help your through whats important to you both,

    Kind Regards
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