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How should I structure my loan??

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Aidan101 | 23 Aug 2013, 02:27 PM Agree 0
Hello,
I am planning to purchase another property in Adelaide. I currently own a unit which I am living in which I purchased two years ago for $260,000 with two principle and interest loans. One is a fixed interest loan for $100,000 with 94,000 owing, the second is a variable interest rate for $100,000 with $40,000 owing.

I am planning to purchase a house for approximately $500,000 using the equity in the unit to help fund the house which I plan to live in while renting out the unit. I believe I can get $260-$280 a week rent for the unit.

I am not sure if I should take out my extra money from the unit and pay off the house and negatively gear the unit or get a positive return on the unit?? I want my money to work for me to be able to purchase more investment properties.. Not sure what to do, can anybody help?????


  • Eos Property | 23 Aug 2013, 08:43 PM Agree 0
    Hi Aidan,

    Not a broker - and would strongly recommend you grab yourself a decent one. Got a couple I can recommend in Adelaide if you want.

    In my opinion you do have some tidying up to do. Make sure you do this before you go much further - this will keep things simple.

    Given your existing will/could become an investment property convert your loans to interest only as a matter or priority.

    At the same time speak to your broker about reducing your limit on the variable loan so you can access the available funds. Recommend you do not use a redraw for this - it will compromise your tax records.

    You may also find it convenient to merge your existing two loans into one if you can - be aware you will/may incur break costs so speak to your broker about this.

    Once you find your new home then use the security provided by this and funds from a new line of credit (secured by your unit) to buy your new home.
  • Aidan101 | 24 Aug 2013, 07:32 PM Agree 0
    Thank you Eos property for your advice, I will definitely look into your suggestions and would be very grateful for your broker recommendations.

    I do have unlimited redraw facility on my current loan so I will have to look at other options in order to receive maximum tax deductions.
  • Eos Property | 27 Aug 2013, 10:46 AM Agree 0
    Hi Aidan,

    Give Simon Norris a call at Go Loans - T: 08 83638800 (work)

    If you are happy to work by phone can recommend the following:
    Robert Coombs - Crystal Finance (Perth) - 08 9455 3072
    David Linco - Davlin Finance (Sydney) - 02 8445 9999

    People often feel the need to use someone close to them (face to face contact if you like) - good operators are highly skilled at working remotely so see how you go.
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