We want to buy a new home - should we sell or rent our current
place?
Q.
We are both 28 years old and have a combined income of $105,000.
Our mortgage is $155,000 on a two-bedroom unit. The current value
of the property is $290,000. We are expecting a baby soon and would
like to upgrade to a bigger house worth $450,000. Should we sell
our current place and use the CGT-free money towards the deposit
for new house - or should we rent out our current place and use 20%
equity finance mortgage to finance a part of our new home?
A.
The problem with retaining the present property is that you will
have a huge non-deductible debt on the new home. I prefer the
strategy of cashing in the unit now tax-free, so you will have a
substantial deposit. You could always borrow back for investment
later.
Each week financial advisor Noel Whittaker answers your
questions.
