Buy or Rent (Owner Occupier with $300K Offset)

pinnacle on 26/09/2017 - 08:01

We are a family of four and need to move to a different suburb due to Kids schooling. We own the property we live currently with the loan balance of about $325K and we have $300K in the offset account. We do not want to sell this property now.

We have three options in the new suburb where we move.

  1. Buy a 3BR House little further away from schools and shops. We might be able to get another loan towards this property. Due to personal situations, this is the least preferred option. We will be able to move to a house in two years time once the kids grow up.

  2. Buy a 3BR Townhouse closer to schools and shops. We found that the price difference between Townhouse and Houses in the suburb is not much. Which makes investing in a townhouse at this stage, not a good option.

  3. Rent a 3BR Townhouse/Unit. While we prefer this option in the short term, the monetary loss of moving the amount from Offset into a Term Deposit is considerable (we do not want to keep the balance of $300K in the offset once we make the unit as a rental. Wife is currently not working and hence will be able to have this amount/interest within the taxable threshold.

We incline towards (3) though in the two years, we will need to have some loss on the offset balance.

We understand the forum is not the place for financial advice and that we will be suggested options such as Bitcoin etc which we are least interested. Thanks.

Poll Options expired

  • 17
    Buy a House
  • 1
    Buy a Townhouse
  • 5
    Rent
Financial

Comments

  • Skramit on 26/09/2017 - 09:26

    Depends if the rental income from your current house plus your salary paying two mortgages will cover off enough of your new home loan for you guys to live comfortably and not be stressed. You really need to speak to a mortgage broker and do the sums for all situations. Also speak to local property managers to get an idea on rental expectations for your current house.

    I don't think OzB can really help you decide other than to say, do the sums and work out what's more important - location or house quality/size as it sounds like you can't afford both.

    Renting is also a good option because it can work out quite cost effective as you avoid paying stamp duty twice if you move again in a couple of years.

  • JimB on 26/09/2017 - 10:23

    You own your house outright, or close to it.

    Buy a nice house close to the shops and school. Sell existing house.

    From a capital gain point of view, you'll do better investing in a nice house in a better location.

    Sure you won't be able to tell people that you an investment property, but your overall net wealth will be same. Plus, all capital gains are tax free.

    • manshrew on 26/09/2017 - 10:30

      I told people that "I an investment property" once, they just looked at me weirdly.

  • pinnacle on 26/09/2017 - 19:24

    Thanks all.

    Skramit - Good point on paying stamp duty twice. That is one other reason why we do not prefer option (2).

    JB1 - Instead of over-leveraging, we might look into the suggestion of selling the current property and buying a good sized house, if we follow (1).

  • Oofy Doofy on 08/10/2017 - 20:31

    ETF, 'DJRE' international property fund. Can pull money out as necessary (if you need it), and it pays you dividends (in this instance it's basically rent money).

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