[EessjParticipant@eessjJoin Date: 2014Post Count: 1]

August 1, 2014 - 4:29 pm

Jamie Moore wrote:

Hello

Purchasing a PPOR and using the equity to fund the deposit/costs on an IP is a good strategy – and one that a fair few of my clients adopt. Here’s an article I wrote on the strategy.

If set up correctly, it doesn’t need to involve cross collaterisation at all. You just need to set up a separate loan split which will be used to cover the deposit/costs on your IP and then a third loan to cover the remaining balance against your IP.

So it will look something like this:

PPOR
Loan 1: PPOR loan
Loan 2: Equity release to cover deposit/costs on IP

IP
Loan 3: Remaining balance needed for IP

For your second IP purchase, you could look to either release equity again against your PPOR or your first IP – it just depends on where it’s available.

You may also have some cash you’re willing to use for another purchase. In that instance, we’d look to inject those funds into your PPOR loan and “reborrow” them to make them deductible. But I don’t want to overwhelm you just yet :-) We can save that for another day.

My advice is to set yourself up with a good team – that usually involves a good finance person, accountant and legal person. That way, you can worry about finding properties while they worry about the finance/structure.

Hope that helps.

Cheers

Jamie

Hi Jamie,
Will repayment be made on LOAN 2(Equity release to cover deposit/costs on IP) once this loan is taking out even though it equity from his PPOR?

• This reply was modified 9 years, 9 months ago by  Eessj.