General trust/mortgage/tax advice request

[Marjie]

I have a 400k property with a 70k mortgage thus have large equity in it.i am wondering how fast to pay this off.i have just restructured to paying a p&i instead of int only but now wondering if that's best practice.i obviously make income so at tax time have to pay tax back.i guess I'm asking if I should pay it off quicker rather than relying on capital gain?also not sure if putting in trust is a goOd idea.i don't want to be caught with being stung at retirement by having too MUCH money if that makes sense.anyway I know I haven't explained myself too well but hopefully someone could give me some advice

[Marjie]

General mortgage /tax/trust advice reqd

I have 400k property with 75k mortgage.renting at 360 per wk.just wondering first if I should pay off as quick as pos?also whether to put in a trust?

[Re@der]

Why do you want to pay off quick, do you not have better things to do with the money as this is the cheapest time ever to have a mortgage?

[JABlog]

Gross Yield 4.68%

I think it is a fair question- in this uncertain times paying down debt is the best advise anyone can give. - not to dampen anyones spirit risk aversion is a good strategy.

[Marjie]

So 2 diff opinions?yes I'd love to spend more money but just thought paying principal was better?

[Perry]

I suspect that the comment, "better things to do with the money"
was not at all intended to foster discretionary spending.

[Re@der]

I certainly did mean to invest rather than to spend. I agree that these are uncertain times but this appears to be the bottom of an economic cycle with some signs of recovery. Even with a relatively short investment horizon of 5 years riding the cycle up should be possible. Commercial or residential Real estate, shares, all with some potential and with cheap money. Of course this does not mean that you should not buy with proper diligence, just that the environment should be positive.

[JABlog]

Agree with Doug, ask yourself what is it that you are trying to achieve, what your long term goal is then hopefully it will make sense.

[Rosco]

should you put the property in a Trust?

- watch any depreciation recovery issues
- Look at the cost vs benefit? What is the real benefit from having a Trust? Are you at risk and is asset protection important to you?

Have a look at thread on 'trust experts' too

Ross

[Rosco]

Hi Marje,

Do you have any other debt? Like on a personal house, credit cards, HP's etc. If so you want to try to pay these of first as they are either costing you more interest or giving you no tax deduction on the interest.

If the rental property debt is the only debt left, then in general you would pay it off. Until you find something better (better return) to put your money into, so maybe another rental, or other investments. You are saving about 6% on your rental mortgage, which is much better then getting 4% on a term deposit.

With lots of banks like BNZ, you can have a term deposit offset your mortgage. So this may give you a nest egg for emergencies, but still save you interest at the mortgage rate.

Ross

[Marjie]

Ross no I don't have any other debt so sounds like il keeping Up on paying it off.thanks for advice