Stu Ward

Until we fully understand the cost of living in Aus i have thought about doing the following.

Is this an option worth pursuing or not

Renting my house out (we want to keep it)
Downgrading the mortgage to Interest only, this makes the rental gained profitable.
Paying off lump sums off the mortgage when it can be afforded.


Its either that or leave a lump sum in a UK bank account from which the rent is paid into and the mortgage (Repayment) comes out of. Each month the lump sum is eaten in to.

Some advice or experience would be greatfully received

Stu

asprilla

If I were in your shoes, I'd go for it. If the rental income is covering mortage costs (interest only, or not) plus other costs like property management, then go for it. There might be a point in the future when the rental income has risen to a level where it will cover principal and interest repayments, at which point you can sit back and wait for the house to be paid off.

There are a couple of things you need to think about though:
a) the risk that you will not receive your rental income...or, that the property will remain vacant for a period. How would you cope with either of these scenarious?
b) if you were to sell the property, you would have a chunk of equity to start with in Oz....renting it out means that you will not have these funds.

If you are comfortable with (a) and (b), then I don't see why you shouldn't do it.

Stu Ward

Thanks for the comments Mark.

Has anyone actually kept their home in the UK and rented it out on an Interest Only mortgage ?
What i would really like to know is does thie method make sound financial sense or are you throwing lots of money away just to be a couple of Pounds / Dollars better off each month ?


Thanks again

Stu

Mrs Jackaroo

We do it Stu. I suppose it depends on your reason for keeping the house. We wanted to keep ours initially because the housing market was poor......plus it was our little bit of security if things didnt work out. If you're not bothered about the mortgage being paid off then its not a problem. If you're happy to think of it as an investment, that you'll sell for a profit at some stage......then interest only is great

skoots76

Hi all
Sorry I dont have any advice on this i just wanted to jump on the thread as Me and the Oh are in the same situation. Think we will go down the line of keeping our house in England and renting it purely for having a bolt hole back in England if all fails in Oz.

longreach

The only thing I would advice is that you make sure you have some funds for a deposit should you wish to buy here in oz. As interest rates are a fair bit higher here, it makes sense to have as little gearing as possible in Oz.

Cheers,
Mark.

Mrs Jackaroo

Good point! We want to buy here now and are in a difficult position.........we either need to remortgage our UK property to release equity (not easy when your income is in Australia) or we have to sell up.

Stu Ward

Its our intention to rent whilst out in Aus

GaznEm

Dependent on how long you are going to be in Oz for, don't forget to speak to your accountant about any Capital Gains Tax implications as well.

Grayling

You will also be liable for Australian income tax on the rental income.

Stu Ward

Even if it sits in a UK account ? Surely that will be liable to UK taxation and not Australian

Stu

Grayling

Afraid not

as an Australian resident you are taxed on your worldwide income.

The rules are different for some temporary visa holders.

You can avoid paying any UK tax under the double taxation agreement

G

Stu Ward

We are going over on a 457 Temp Visa
Know how i stand on that ?


Stu

Grayling

The tax rules are different for 457 visa holders.

Sorry......I do not really know how it will affect you....no doubt someone else can advise.

G