SearchChanging property use
Phil asks:
(updated on Wednesday, July 05th 2017)
I am looking to turn our current house into a rental property and to purchase a new house for me and my family.
Our current house's value according to homes.co.nz is $550,000 - $570,000. We owe $225,000 so we have about 60% equity. I want to look at purchasing another house at around $550,000. That would leave us with one house with 40% equity and one with 20% equity.
I believe we can rent out our current house as two dwellings: upstairs as a three bedroom and single internal garage and downstairs as a two bedroom unit. I estimate that the upstairs dwelling could be rented out for $370 a week and the downstairs unit could be rented out for $220 a week - which would give us rental income of $590 a week.
Is this a good move? And do you have any advice on what should be considered? I'd like to know where to next.
Our Experts Answer:
Based on the numbers that you have stated that all stacks up and makes sense.
But get in contact with a good property accountant as it could be advisable with the change in use of your current property to look to put it into a LTC.
And you may want to restructure the mortgage on the existing property by putting this onto a interest only basis and then concentrate principal reductions on the new property as well.
Most Read
| Unity First Home Buyer special | 3.99 |
| SBS FirstHome Combo | 3.99 |
| TSB Special | 4.39 |
| Co-operative Bank - First Home Special | 4.39 |
| ICBC | 4.39 |
| SBS Bank Special | 4.49 |
| Unity Special | 4.49 |
| ANZ Special | 4.49 |
| Westpac Special | 4.49 |
| Kiwibank Special | 4.49 |
| Co-operative Bank - Owner Occ | 4.49 |
| ICBC | 4.59 |
| ANZ Special | 4.69 |
| TSB Special | 4.69 |
| BNZ - Std | 4.69 |
| Wairarapa Building Society | 4.79 |
| Nelson Building Society | 4.87 |
| Westpac Special | 4.89 |
| Co-operative Bank - Owner Occ | 4.89 |
| Kiwibank Special | 4.89 |
| SBS Bank Special | 4.89 |
| Unity Special | 4.89 |
| ICBC | 5.19 |
| Westpac Special | 5.29 |
| TSB Special | 5.29 |
| BNZ - Std | 5.29 |
| SBS Bank Special | 5.69 |
| Co-operative Bank - Owner Occ | 5.69 |
| Kainga Ora | 5.69 |
| ASB Bank | 5.69 |
| AIA - Go Home Loans | 5.69 |
| Kiwibank Special | 5.79 |
| Westpac | 5.89 |
| SBS FirstHome Combo | 3.29 |
| AIA - Back My Build | 3.34 |
| SBS Construction lending for FHB | 3.74 |
| CFML 321 Loans | 3.95 |
| Co-operative Bank - Owner Occ | 4.99 |
| Co-operative Bank - Standard | 4.99 |
| Heartland Bank - Online | 5.30 |
| ICBC | 5.39 |
| Kiwibank - Offset | 5.65 |
| Kiwibank | 5.75 |
| Unity Standard | 5.79 |
