Cash-rich, how should I invest?

Question from Selina updated on 16th September 2011:

I am in a unique position and am wanting to make the most of it. I currently work overseas on a privately owned motor yacht. I currently earn a salary of USD $7,000 per month, and do not pay tax, or have living costs. I currently have two houses in Gore, Southland, with a combined outstanding mortgate of under $20,000. I have savings of only $6,500, as I have put all money on mortgages. I would like to expand, but really need advice; should I pay down my mortgage; save for a deposit; or go ahead and invest in more property? Any advice would be greatly appreciated.

Our expert Kris Pedersen responded:

You should probably convert your mortgage to a revolving credit facility so that you can direct your cash into the mortgage thus saving on interest but still having the flexibility to withdraw the funds should you need them for a deposit.

From an asset protection point of view I would recommend as well to remove the mortgage on what of the properties so it is completely unencumbered as if you only have $20,000 owing the bank should have sufficient security with just the one property.

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies.

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