Finance & Strategy Expert
We currently have a farm and two rental properties with the same bank. The bank holds securities over all properties for all loans. We originally used the equity in the farm to purchase the rentals. Someone told me we shouldn't have it set up this way. Is this correct? If so, can you tell me why?
I have two questions. Firstly, my partner and I are looking to buy our first property in Auckland. We're currently on two incomes and have no children, but we expect this to change in two years. We have two approaches in regards to what we can afford: Firstly a two bedroom unit on the city fringe - as we know there is good capital gain happening - with the idea to sell in a few years and move into a family home in our ideal location. OR buy a home in the location (Titirangi) we like now with the view to stay for longer but with much lower gain. The problem is what we can afford now is very different from what we can afford on one income. Hence my second question: I earn significantly more & I'm worried that when I have a baby I'll be pressured to go back to work too soon. We have been advised we could top up the mortgage at this time, but I'm not sure which is the best way!
We are looking to buy in Ashburton, around the $250,000 to $300,000 price range and have a 20% deposit. I am currently trying to decide which provider to get a pre-approved loan with. This is where I have become completely stuck. We are investing for long term gain, but would like to be able to use the equity to purchase future property. In this case is it better to have an interest only loan? And keep our savings for further properties. Or is it best to pay off more of the loan and then use the equity for future properties? In either case what is the best way to go with interest, fixed or floating? And what about the off-set loans? I am currently in a well paying job where this option would be good, but I only plan to stay in this job for this year. Would it then cost to change the loan to a different set up? I also am a non-tax resident currently, what effect would this have on the property? Or would buying effect my tax status?