Can somebody please help us.
We have refinanced our investment properties over the last 2 years.
One adviser has said that we should have a LOC loan and the other has advised us to have a P&I Loan.
We are now totally confused and it’s frustrating and costly to change loans.
Please HELP!!![comp]
A third advisor might even suggest IO with an offset account [biggrin]
Without knowing more of your situation and goals it would be irresponsible to make any recommendations.
All the best,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Cheryllee,
Its hard to give specific suggestions with out being privy to all the details, but I would not suggest a LOC but rather an Interest only loan on the investment properties as this will give you the flexibility to make extra repayments at your discretion. Cheers.Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Apologies Simon I dint see your post, I was about to submit my reply but was distracted by a phone call, Cheers.
Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Hi Cheryllee,
I’m going through the same process myself.In my situation, and probably the majority of investors, is to keep all your loans separate – dont cross-collateralize the loans.
IP loans secured against the IP itself should be minimalist, no-frills, basic, low cost etc to keep your costs down.
Interest Only – keeps the payment amounts down, and taxable claims up.
Take the deposits from an LOC against your PPOR.
The LOC should be for tax deductible drawings only, including IP rates, insurance etc.
A second split (I/O with 100% offset) would also be desirable for personal expenses, borrowings and daily transactions – including the balance/mortgage remaining on your PPOR.
When the equity increases in the IPs, increase the IP loans, and place those extra funds back into the LOC, and repeat.That’s my prefered setup.
Originally posted by Mobile Mortgage:Apologies Simon I dint see your post, I was about to submit my reply but was distracted by a phone call, Cheers.
Regards
Steven
Mortgage BrokerMobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.auPLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.
Well it is pretty positive that we are both on the same track!!
No need to apologise mate.
Cheers Steve,
Simon Macks
Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
I am totally against using a LOC as everyone here knows. As for a P&I loan on an investment property, this is the most ridiculous advice I have ever heard offered to a borrower by a mortgage broker. I would not be using that broker any time soon.
Investments should always be interest only as it maximises your options. If you want to reduce debt, don’t pay into the loan but attach an offset account so you still have a lot of flexibility.
I don’t know why you think it is frustrating and costly to change loans as it is usually a very simple and fairly cheap process (less than $1,000) unless you are tied down with fixed loans or other break costs.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksIts not something I would do, but I had a client today that wants a PI loan on his investment property. Some people are just more conservative and more comfortable with paying off debt.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I hope you educated the client as to the negative aspects of their decision???
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksAnother point. Having your investment loan as a LOC could result in problems with taxation – depending on how it is used.
Every time money is placed in a loan it is considered a repayment. Every withdrawal is considered new borrowings.
So if someone has their salary deposited directly into the loan and then withdraws money for food/living expenses etc, the interest on the withdrawal will not be deductible.
If the LOC was used for investment purposes only, there would be no problems.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Very impressed!!!Now all that needs doing is to get you to agree LOCs are pretty damn useless secured against a PPOR as well!!!
))The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links
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