# 200K cash - earn bank interest or downpayment for house? Why?



## gasgasgas (Dec 29, 2011)

Hi, if u have 200K cash, will u put in bank and use earned interest to pay rent..?

Or, put this sum into downpayment for house..?


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## MaddyOZ (Aug 16, 2011)

gasgasgas said:


> Hi, if u have 200K cash, will u put in bank and use earned interest to pay rent..?
> 
> Or, put this sum into downpayment for house..?


What currency you are talking abt?

Which country downpayment for the house? Please let us know the objective of this question....

Sent from my ipad using Expat Forum


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## twister292 (Mar 25, 2011)

gasgasgas said:


> Hi, if u have 200K cash, will u put in bank and use earned interest to pay rent..?
> 
> Or, put this sum into downpayment for house..?


I would ask the advice of a licensed financial advisor.


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## kaz101 (Nov 29, 2007)

What are your financial goals? What do you want to achieve? What's your financial situation at present? I know more questions than answers  

Personally I wouldn't go to a financial planner / adviser unless they are recommended to you. Most of the ones I've been to just suggest buying insurance policies and have no idea about investments unless it's a pension  If that's what you're after then they can be okay but when I think about investments I want more than that! 

Cheers,
Karen


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## anj1976 (Apr 24, 2008)

If i have 200k i'd rather put it as down payment and buy a house. 40% out of the the interest you get from the bank is deducted as tax. Most people I know here invest on properties, they say the best way of investing in Australia is property


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## Maz25 (Jul 6, 2008)

I agree with Anj. I would not put all of it down as a down payment as you should have a little bit of cash in the bank for rainy days but the vast majority, I certainly would put towards the purchase of a house.

If you can afford your own house, there is no point in paying rent, which is nothing more than paying someone else's mortgage for them. 25 - 30 years from now, your house will be worth more, so you'll have more than the 200k you invested back, albeit it will be in the form of bricks and mortar.


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## twister292 (Mar 25, 2011)

anj1976 said:


> If i have 200k i'd rather put it as down payment and buy a house. 40% out of the the interest you get from the bank is deducted as tax. Most people I know here invest on properties, they say the best way of investing in Australia is property


No it isnt. Unless you make some error with your TFN, tax from interest is not deducted at source by the bank, and it's certainly not taxed at a flat 40%.

Interest you earn is added to your other taxable income (salary etc) and then and appropriate tax rates applied.

As such, 200k in the bank would pay roughly $12,000 per annum of interest at max at current deposit rates, which would have only a $900 tax on it if it was your sole income.

PS As moderators, I would bring to your attention that anything which is considered "financial advice" should be avoided. It is potentially illegal to give financial/investment advice without appropriate registration with australian authorities.


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## kaz101 (Nov 29, 2007)

twister292 said:


> PS As moderators, I would bring to your attention that anything which is considered "financial advice" should be avoided. It is potentially illegal to give financial/investment advice without appropriate registration with australian authorities.


That's a good point in case anyone else misunderstands. 
Advice isn't given on here - financial or otherwise. It's people's opinions on what they would do in a situation. We can't give advice on how to move to Australia either since we're not agents but we can talk about it from our personal experiences and sharing the experiences of others on the forum. 

Cheers,
Karen


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## atsurti (May 20, 2011)

What if the property prices start going down in Australia similar to what has happened in US. Prices have gone down by 50% in US from the peak.

The prices in Australia have been on a roll for quite some time now and a cool off cannot be ruled out. I read somewhere that the prices have come down a bit in Oz.

Any opinion from someone who already is there in Oz?


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## twister292 (Mar 25, 2011)

atsurti said:


> What if the property prices start going down in Australia similar to what has happened in US. Prices have gone down by 50% in US from the peak.
> 
> The prices in Australia have been on a roll for quite some time now and a cool off cannot be ruled out. I read somewhere that the prices have come down a bit in Oz.
> 
> Any opinion from someone who already is there in Oz?


Prices seem to be topping out and retreating in some suburbs, that's correct.


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## kaz101 (Nov 29, 2007)

atsurti said:


> What if the property prices start going down in Australia similar to what has happened in US. Prices have gone down by 50% in US from the peak.
> 
> The prices in Australia have been on a roll for quite some time now and a cool off cannot be ruled out. I read somewhere that the prices have come down a bit in Oz.
> 
> Any opinion from someone who already is there in Oz?


It really depends on your strategy if you're a property investor (or thinking about investing in property). 

If you're an equity investor and your mortgage is covered by rent you simply wait until the market goes up (however long that takes). 

If you're a cash flow investor then as long as your property keeps bringing in an income then whether prices go up or down it doesn't matter. Again you'd sell when prices were above what you paid for it. 

If you're a home owner you may want to put in a healthy deposit. Yes house prices may go down but then the one that you're buying next will have gone down as well. The main concern is that you can cover the mortgage. If you're with a fixed rate mortgage then you know what your payments will be - if you have a variable rate mortgage and the interest rate is low (like in the UK) then your payments will be a lot less.

I know that's a simplified version 

Australia is a big place and what's happening in one place is not always happening somewhere else. Where we are in the Limestone Coast house prices have fallen dramatically but that's because of a decision by the SA state government to sell off local industry. In other areas prices have levelled off - you really need to check the area that you're thinking of moving to....

Cheers,
Karen


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