QUESTION:
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My husband and I are in our 40’s with a combined annual income of $230,000 a year. We owe $425,000 on our home, which is worth $750,000. We also have a $430,000 mortgage over an investment property which is negatively geared. We are considering borrowing $250,000 on a home equity loan to cover an extension on our PPOR, and school fees for the next four years. My husband has $140,000 in super, I have $30,000, but we have no other savings.
Are we biting off more than we can chew? I’m concerned that, while we can service our loans now, we will have considerable debt when we reach retirement age.
ANSWER:
Hopefully, the properties will increase in value over the years and the loans will reduce. Also, you could always sell one of the properties after you retire if you thought you were over committed. My advice is to plough as much money into superannuation as you can now, this will give you a good safety cushion when you retire.