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Moving Interstate - sell or rent

Discussion in 'Introductions' started by Rhendrix, 27th Oct, 2012.

  1. Rhendrix

    Rhendrix New Member

    Joined:
    27th Oct, 2012
    Posts:
    3
    Location:
    Melbourne, VIC
    Hi,

    We are wanting to move back to Queensland and just seeking some opinions regarding what to do with our current home. We will be buying on the Sunshine Coast and wandering on opinions about whether it best to sell current house or to rent it out. My husband has put in for transfer and I will need to find new work.

    We will obviously be speaking with accountant, real estate agent and bank but would like some feedback so I know the right questions to ask.
     
  2. jrc77

    jrc77 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    147
    Some questions rather than answers.

    What is your current loan situation with your existing house? Do you have much owing, and have you been using an offset account?

    Where is the deposit for your new PPOR coming from?

    Regards,

    Jason
     
  3. Rhendrix

    Rhendrix New Member

    Joined:
    27th Oct, 2012
    Posts:
    3
    Location:
    Melbourne, VIC
    Thanks Jason,

    Well currently we have a split loan with an offset account. It's a package that we just pay an annual amount on to avoid paying all other account and transaction costs.

    We have owing $330k and most recent valuation said house worth $430k.

    Deposit unfortunately is the key as we would have to be borrowing as much as possible. I had looked into possibly selling and have seen some institutions offering relocation loans but was not sure if we would be better off in long run.

    Total debts are the mortgage, personal loan ($6k), and two credit cards totaling ($15k). I realise these sorts of decisions are a collaborative effort between the bank, the accountant and real estate agent but as you can tell we haven't had much experience in this. Last time we moved interstate we were renting so whole process was a lot more straight forward. Our current home is in a fabulous school area and would be a fabulous rental so would love to keep if possible.
     
  4. jrc77

    jrc77 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    147
    Rhendrix,

    When you say a split loan do you mean part of it is fixed and part variable interest rate? If so, there may be possible break fee complications from any fixed part.

    Has the only transactions on the loan account been payments and interest? ie. no drawdowns for personal expenses? If so, your existing loan could be contaminated - affecting your ability to claim all the interest if you turn the house into an investment property. Given that you have an offset account, hopefully all extra repayments and withdrawals have been from it.

    Did you pay LMI on your original loan? (80% x current val $430k = would indicate max loan of around $344k without LMI - in general).

    Doesn't sound like a lot of equity to play with.

    I am assuming from this your credit cards are close to fully drawn down and not paid in total each month? Work hard to clear these as soon as possible. They will not only cost you a lot of money, but will hinder your ability to apply for future finance.

    I would suggest that you first contact a good mortgage broker who will be able to guide you on what is possible from a finance point of view. Speaking to your bank I think should come later - they may tell you what's possible with them, but won't advise you if it is possible with another bank.

    Before doing this, try to get an idea of what your current place would be able to be rented for and an idea of how much your new PPOR would cost to buy. The broker will need to know this information.

    Also note that if you are changing jobs this may make financing the new place more difficult - as most banks won't accept your income if you are in a probationary period at a new job.

    It may be worthwhile considering renting in your new location for a while - to allow your work situation to be settled, and to explore your new location better before committing to purchasing a house. I've always been an advocate of renting in a suburb where you intend to buy (to live) before committing to a big expense.

    Regards,

    Jason
     
  5. Rhendrix

    Rhendrix New Member

    Joined:
    27th Oct, 2012
    Posts:
    3
    Location:
    Melbourne, VIC
    Excellent thanks Jason. I posted on here because I wanted food for thought and you certainly have given me that.

    I have always wanted to eventually have an investment portfolio, so really hope to keep this house if possible. Yes by split I was referring to both a fixed and variable loan. The larger portion is fixed.

    After reading you reply, we have discussed and will definitely rent first up there. We only dismissed that idea as we have two dogs which really limits the renting options.

    We considered two options:

    1. Sell up and rent.

    This will clear all debts and we make a fresh start with any proceeds. We would rent until can secure employment. Only problem we see is that we would no longer have anything else to have as security and would have to try find deposit and everything again from scratch.

    2. Refinance to clear current debts removing credit cards and personal loan.

    Hubby could secure his transfer and secure us a rental. Meanwhile I would remain in Vic for a while and place house for rent then join hubby again in Qld. This option removes the extra debt, we would rent 6-12 months until such time where we could lend again for a home. This time will allow me to secure employment until ready to buy.

    This second option is where I would like to aim. Again, always welcome feedback as knowledge is power in this real estate game!