Hi Chelkin

Firstly welcome to the forum and i hope you enjoy your time with us.

Unfortunately your problem and concerns are one we get asked by clients on a regular basis and probably needs some specialised advice to ensure you are not digging yourself into a deeper well than needs be.

There are a couple of things you need to do and these will depend on your current and future goals and objectives.

Certainly in my opinion you need to separate the loans and this will enable you to start working backwards.

From what you have mentioned your current PPOR may well become an IP in the future so you need tread careful in regards to the Tax persepctive and the treatment of the deductible interest. I would recommend an Interest only loan with 100% offset account.

Then you need to look a sub loan to cover the balance of the funds required to separate your IP and an equity account to access deposits for future IP's.

Obviously it is difficult to comment further without the actual numbers but you are more than welcome to drop me an email and I be happy to look over the deal for you.

Cheers

Yours in Finance

Hi Jo

No certainly your suggestion isnt going to help you overcome the issues.

Difficult as i say with the numbers but have a read of my 3rd paragraph and that should be something worth considering.
Your Broker should be able to give you the varying options but certainly having say a loan with $575K of deductible interest should aid you going forward.

Cheers

Yours in Finance

Hi Jo

By all means you can refinance however the maximum you can claim as an interest deduction is the current $350K.

Deductibility relates solely to the purpose so refinancing or redrawing is considered a new loan and therefor if the purpose is to purchase a new PPOR the "purpose test" has failed and the interest is non deductibile.

Depending on how the property is held (i.e Joint Tenants, Tenants in Common) and your individual Marginal Tax Rates you maybe able to look for one of you to buy the other's interest out in the property and structured correctly the interest on the entire new loan would be decuctible. 

Often clients chase an interest rate yet with more indepth understanding they find that rate is relatively immaterial in the long run especially if structured correctly the savings can be considerably higher than a small rate reduction.

Cheers

Yours in Finance

Firstly welcome to the forum and I hope you enjoy your time with us.

I would echo what Dan has already said to be your age and own a couple of IP's isnt a bad start but i can understand how frustrating it can be to go to your local Bank and find you have more equity than the manager and really what does he now anyway.

As long as you have the income to support the borrowings there is no reason why you can gear against your existing securities and use these funds as deposit for your new IP purchases.

Structure is the main key to any financing so that you dont feel stick in the mud after a couple of property acqusitions.

Obviously without knowing any numbers it is difficult to comment further but depending on your income / expenditure there is absolutely no reason why you cant move forward.

Admitedly i am a little older than 25 but only arrived in Australia when i was 28 and didnt take me long to get to grips with the market and financing opportunities.

Cheers

Yours in Finance

It is a question that raises its ugly head on a regular basis and regretfully the answers are much the same.

If your Broker or Banker had set the loan up as an interest only loan with 100% offset account the issue would not have occured.

Of course if this has not been the case then you have a couple of options depending on the numbers  

1)  Look to buy out your spouse's interest in the property.
2)  Sell the property to a Unit Trust at 100% of market value

Depending on the numbers will determine whether the savings outweighs the costs and if so it maybe worth considering.

Cheers

Yours in Finance

I woudl be commissioning a private valuation yourself on any property away from your Bank.

Whatever you do dont let me them convince you they have someone who can arrange your finance in house or suggest you cross collateralise securities by putting your PPOR or other IP into the mix and that way do have to worry about the valuation.

Cheers

Yours in Finance

At the moment you are paying anything from around 1.2 – 1.7 for a trail book whilst a rent roll is standing at around 2.2 – 2.4 x annual commission.

There are a couple of specialised companies that sell trail book but as the boys said i would never look to buy a MC franchise especially if you intend to run it from home. No value there and the asset may go backwards.

Stick your cash in the Bank and you get 6.5%.

Cheers

Yours in Finance

It is not a bad thing to pay down the principal on an IP as long as you dont have any non deductible debt (Trust me i paid off
$9.6M in nearly 10 years on our portfolio) but it is the opportunityof cost that is the issue.

It is what you can do with the extra monthly amount that makes you different.

Sitting in a IP loan going nowhere or using it to fund deposits on the next half a dozen properties which over the next 10 years is potential going to make you a decent return is the difference.

Have said all that if you are comfotable and nicely living off the rental income of your portfolio why wouldnt you pay down the principal debt.

Cheers

Yours in Finance

Hi bella,
 
Hard to make further comment without the actual numbers but remember if LMI is charged on the IP loan then it becomes a loan cost and is Tax deductible.

Cheers

Yours in Finance

Unless as i mentioned you look to purchase your Spouses interest in the property out or sell the property to a Unit Trust.

Changing the purpose can mean the interest deductibility also changes.

Cheers

Yours in Finance