Hi I'm buying a small business and it's lets say $ 130.000. I have a mortgage of $270.000 (house value is $540.000. I have savings of $200.000..What is best to do with my savings ? put it on the mortgage, or buy the business.. Or invest elsewhere..
Congratulations on looking at purchasing a business!
Best option would be to speak with your accountant regarding the business and set up, and they will be able to advise of the best option for you, whether it be investing your savings into the business, place on your mortgage or another option they could suggest.
When it comes to a business, your accountant is an expert in helping you with the right structure!
Happy to speak further if you like!
Mortgage & Finance Broker
0400 *** ***
Damian is correct, you really should have your account develop a full plan with you.
As an opinion, It is best to have any debt you hold deductible. That is I would borrow for the business and use the savings to offset your home loan.
Best of luck with the venture
Your situations requires careful planning and a good relationship with an accountant who will assist you in the process.
Having a debt that is tax deductible is preferred over have debt that is non deductible. But you also do not want to lock things in either, where possible.
I would suggest that you purchase the business with a loan, and leave the $200k in an offset against the mortgage (assuming it is the family home). Do not pay it down, as you may need to move the funds around (esp if you decide to make the property an investment property).
I hope this helps - I am available for a chat if you have questions.
02 9 *** ***
Business can be exciting and painful in the same day.
Get some good financial advice, some good legal advice, some good accounting advice and some good business advice, THEN and ONLY THEN, decide if the business you are looking is worth your money, your time and your blood, sweat and tears...
Good luck and ask lots more questions mate