YOUR QUESTIONS

We are both in our early 50s and have three adult children. One is still a dependent as he is a full-time student, but will finish this year. I recently gave up work to start a business, from which Im yet to draw a wage, but I will persevere for another 12 months. My husband is on $80,000 a year and lives away (rent free) during the week for work. We are considering selling our home and downsizing from a large house on a very large country block to something more manageable. While we probably need to sell the house we are not sure of the best financial move for us: we have a $340,000 mortgage on a property worth about $420,000. We would like to look at buying an investment property and would be happy to rent for 12 months with the aim of buying another house to live in when we decide whether to move towns or not. We have another $12,000 in personal debts and have a hardship break on our mortgage until January, so need to decide before then. S.K.

If you have a hardship break on your current mortgage and feel you need to sell the property to pay your loan, I dont think you are in a position to buy an investment property, which would likely be negatively geared and thus cost you money.

Since you are not taking a wage, you are better off adopting a short-term move and putting the net proceeds from the sale in a high-yielding bank account for 12 months, with no likely tax liability.

Then see how your business goes. If you get an income, or abandon it and return to outside work, you and your husband will be in a better position to determine what you can afford in the way of a home, which should be your top priority so it can be paid off before retirement.