Chris Bates
speaker
1,659 appearances
5 recordings
1 series
first heard Jun 2021
last heard Dec 2022
Chris Bates’s voice in public audio — every appearance, attributed to the second.
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Appearances
They're really amazing sort of strategy tools.
You keep a lot of money in the liquidity and you also offset your mortgage.
Instead of paying down that loan with actually paying the loan down, $398,000, $395,000, $380,000, they just had an offset account and that offset account went from $5,000 to $20,000 to $50,000, $100,000.
And they didn't really pay down that loan directly.
When they decided to upgrade, they could just take the money from the offset account to use for the deposit on the new place and keep the tax deductible debt on the investment property much higher rather than paying it off.
It's a really common mistake for first-time buyers and first-time investors because they get to us a few years down the line and say, we want to upgrade.
We want to keep it.
It's a great property.
But because they're paid off the loan,
It means they're going to have a huge non-deductible debt rather than keeping quite a bit in investment debt.
Yep.
Yeah, exactly.
So what we want to do with you, Owen, is keep that debt as high as possible.
If you're going to get excess cash, just keep putting in your offset account because when you move out of it one day, you're keeping that debt as high as possible from a tax deduction point of view because your next property will be a home, which is non-deductible debt.
And so you don't want to have this low debt on your place and then paying a lot of money and a lot of debt on this beach house, which is a home.
Now, when interest rates are really low at 2% or 3%, it's not that big of a cost.
But it's only three or four years ago we're talking fours, fives, sixes, and that's when that investment debt versus home debt is really much better to have a lot less home debt versus investment debt.
That's a dream situation to be in.
If you could, that'd be great because you would have full flexibility.
If you wanted to tomorrow, I don't know, something bad happened with your health and you need $150,000, let's say, then you've got it there.
Showing 1261–1280 of 1,659 · page 64 of 83
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