Small deal or big deal?

[Spiffsome]

Hi everyone.

After a time on the Mustachian path my husband and I have managed to pay off our house (worth about $300K Australian) and accumulate a deposit of about $90,000. We are preparing to make our first investment in a major regional centre. We've got most of our criteria nailed down except one: do we go searching for something around $450,000 so we can put a cash deposit down, or do we go for something bigger with a larger return that would require putting up the house as security? We do not want to pay lender's insurance, so either way we'll be putting 20% value down.

[sokoloff]

I'm a very aggressive investor generally (in the equities/options/future arena), but even I wouldn't put my paid-off primary residence up as collateral for an investment/speculation.

You might consider re-mortgaging the house and using the proceeds from that to increase your investment size, but that would still not be putting the house on the block for the new investment directly.

All of this is assuming the market and legal conditions that extend over most of the US: that loans are generally non-recourse and homestead protections for principal residence are fairly strong. I don't know anything about Australian law.

[Spiffsome]

Thank you for that information. I think Australian investment loans are non-recourse but don't know what homestead protections we have. All in all, it looks like a smaller investment may be a good idea.