37 - fully offset my apartment, now what?
- Thread starter loo
- Start date
mititelumarcel
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soniahanda99
New member
@loo Honestly, probably not a popular advice here, but your age + accomplishment is my exact best case scenario future milestone. So in my shoes, if I fully offset my place, I would want to take 3-9 months off travelling while getting rental income from a tenant. Even if you did really want to travel or need a career break, you may like your apartment too much to risk doing this.
@loo A is pretty simple and low risk if you don't want to decide for a while
B or C is longer term options and depends a lot on
B or C is longer term options and depends a lot on
- how you want to live
- your views on long term capital appreciation of this and any other property you'd consider
@loo Another thing you could do is rent a nicer apartment in a place you like (improve your lifestyle) and rent out your own apartment. And invest your savings in ETFS or buy something. Or take equity out and see if you can use it to buy a house in another city. Could use a buyer's agent to find it for you
tashatasha
New member
@loo Congrats OP! I'm in a similar situation at 34.
Bought a 60's brick flat end of 2018 (Inner SE Melb) with 50% deposit (440K and 220K loan).
Fully offset a few months ago mainly possible due to an extremely generous redundancy package and gardening leave given to me in 2020.
Figured I'll stay put here for a while, put current income in high interest savings until rates drop and then use it to purchase another place when the time is right.
Bought a 60's brick flat end of 2018 (Inner SE Melb) with 50% deposit (440K and 220K loan).
Fully offset a few months ago mainly possible due to an extremely generous redundancy package and gardening leave given to me in 2020.
Figured I'll stay put here for a while, put current income in high interest savings until rates drop and then use it to purchase another place when the time is right.
@tashatasha Congratulations to you too. Makes sense assuming the prices don’t run away faster than you can save! The number of people saying I received an inheritance on this thread is surprisingly large. I bought the property when I was 32, I had saved up a lot as I’m frugal and don’t go on holidays all that often, don’t eat out much, drink, etc. I’m sure they’d say that if you two times over as you’re even younger than me when you reached this milestone!
tashatasha
New member
@loo Who cares what people say 
In the end everyone is dealt different cards in life. I lived at home for most of my 20s which allowed me to save. Some have that luxury available to them, others don't. Everyone's situation is different. Regardless, it's a major achievement that you can and should take credit for.
In the end everyone is dealt different cards in life. I lived at home for most of my 20s which allowed me to save. Some have that luxury available to them, others don't. Everyone's situation is different. Regardless, it's a major achievement that you can and should take credit for.
@loo Don’t get rid off your offset account just yet. Leave the balance of the mortgage in there. You’ll pay $0 interest each month and the monthly payments will just move money from your offset to your mortgage each month.
For the cost of the offset account & mortgage account, you’ll have instant access to emergency funds, or funds for a deposit on a new place, or just cash to use without using a credit card or other loan (which both are likely to have a higher interest rate than your mortgage rate)
For the cost of the offset account & mortgage account, you’ll have instant access to emergency funds, or funds for a deposit on a new place, or just cash to use without using a credit card or other loan (which both are likely to have a higher interest rate than your mortgage rate)
whirlygirl
New member
@whirlygirl Basically correct.
whirlygirl
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jennifer301
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@loo I would be looking for a house but not at that cost as a minimum.
When your PPOR is paid off you can cut back on work if you want, career change, move, travel whatever.
Personally, I paid the house off and did a career change, wife works as she sees fit and I have worked maybe 3 months of the last 6.
I’m taking on an APS role next month for a change so that’s full time but who knows
When your PPOR is paid off you can cut back on work if you want, career change, move, travel whatever.
Personally, I paid the house off and did a career change, wife works as she sees fit and I have worked maybe 3 months of the last 6.
I’m taking on an APS role next month for a change so that’s full time but who knows
@loo Depending on how much money you want to keep in cash /offsetting / high interest savings account, you could use that offset $ to pay down the mortgage and then redraw up to a value and use that to buy an australian high dividend yield ETF - this allows you to use the debt of your PPOR to purchase income earning assets and then you can claim the interest of the redraw on tax. You will then also get the dividend as passive income, and buying Australian shares you would also get the franking credit back. ETFs are more liquid than property + doesn't require all the additional outgoing that impact your cash flow.
Look up some articles on debt recycling and see if it aligns with your goals/risk profile
Look up some articles on debt recycling and see if it aligns with your goals/risk profile
divinejourney
New member
@loo The apartment you’ve bought is unlikely to have significant capital gains (you acknowledge you overpaid + apartments don’t grow quickly in value), but you enjoy living in it.
Why don’t you buy a house with an investment property loan, live in it for 6-12 months and then rent it out. By doing so, you get the following:
1) You can elect if the apartment or the house is CGT exempt under the six year rule at the time you sell one of the properties.
2) Any interest paid on the house becomes tax deductible while you’re renting it out, making any mortgage payment manageable. Under the six year rule, there does not need to be a connection between a house’s negative gearing status and its CGT status.
Based on your salary, you should be able to borrow about $1.1m to buy an investment property.
Why don’t you buy a house with an investment property loan, live in it for 6-12 months and then rent it out. By doing so, you get the following:
1) You can elect if the apartment or the house is CGT exempt under the six year rule at the time you sell one of the properties.
2) Any interest paid on the house becomes tax deductible while you’re renting it out, making any mortgage payment manageable. Under the six year rule, there does not need to be a connection between a house’s negative gearing status and its CGT status.
Based on your salary, you should be able to borrow about $1.1m to buy an investment property.