After the credit crunch has come the drastic reduction in interest rates. We spent our Christmas & New Year break motoring across vast areas of northern Australia, relocating a motorhome and a 4WD camper, closely followed by some horrendous flooding. En route, we got to see our house in Mount Isa for the first time ever. All up, the house is quite ordinary, but it has had 2 consecutive sections added on at the back, so it’s actually huge.
The interest rate cuts have certainly made our monthly repayments a whole lot easier. Overall, the porfolio is now actually breaking even, especially after I factor in the tax benefits. During a conversation between me, my finance broker and a financial consultant, it became apparent that during the current financial climate, the concept of continuously borrowing against an increasing equity (assuming it does continue to actually increase) without any intention of paying down any of the loans, will not necessarily be appreciated by lenders. So I have reconstructed the “grand plan” a little, so that there is a little more emphasis on the portfolio paying its way and paying us an income.
