[Paul B.Member@paul-b.Join Date: 2013Post Count: 70]

January 23, 2013 - 12:00 pm

Yes, I presume I would be up for all the costs I was hit with buying our PPOR? Are purchasing costs tax deductible? Come to think of it I would be up for LMI if I borrow 90%. Maybe a deposit of 15% would be better.

[Paul B.Member@paul-b.Join Date: 2013Post Count: 70]

January 23, 2013 - 11:45 am

Hi Shahin,

That's great, thank you for clarifying that for me.

I noticed you assumed I would be placing a deposit of 20% against the IP. I would be looking to put down 10% as I need to absorb purchasing costs in the 40,000 equity in my PPOR.

Is 10% seen as too small?

[Paul B.Member@paul-b.Join Date: 2013Post Count: 70]

January 23, 2013 - 11:12 am

Hi Shahin,

When you are referring to restrictions on postcodes, do you mean that if the property is in a particular postcode the lender may refuse the loan?

How would I structure the loan? The way I see it is I would release equity in PPOR to cover deposit and purchasing fees of investment property. I would have both loans with the same lender.

Some questions:

1. Is it safe to assume I can achieve the same interest rate with the second loan?

2. How does using equity to purchase the property affect the security of my PPOR? If I default on the investment loan does that threaten my PPOR loan?

3. Is it necessary to have a second offset account? Or am I just as well off to have any savings in my (existing) PPOR offset account?

[Paul B.Member@paul-b.Join Date: 2013Post Count: 70]

January 23, 2013 - 10:41 am

Hi Shahin,

It is located in NSW (Hunter Valley).

I calculated equity by finding 80% of the difference between what the property is worth and what is owing on it.