Redundancy planning
Question from Ranjit updated on 3rd April 2013:
I am soon to be made redundant and looking to pay off the mortgage on my rental property. It is floating at present. Is paying off the mortgage a good idea? Also, how will the rental income be taxed? I currently work 70 hours per week so I'm looking to get a job with less hours and the income drop will be massive. I'm hoping that with the rental income all should be okay.
Our expert Kris Pedersen responded:
Sorry to hear about the redundancy. I am not the person to advise from a tax point of view but one option you may want to consider is to see if you can get the mortgage balanced changed into a revolving credit facility and then look at dumping your cash in there. This way you have access to the cash should you need some of it but are benefiting from an improvement in cashflow if you don't as the mortgage will effectively been paid down to $0.
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz
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