[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

July 23, 2018 - 8:05 pm

Thanks Richard. This allows me to calculate a few things for myself.

[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

September 4, 2016 - 8:34 pm

Terryw wrote:

Yes it is.
You could give 2 forms of security –1. the property2. a term deposit
e.g.$100,000 purchase price with $5,000 duty and costs = $105,000 needed.Place $25,000 in a term deposit and borrow $25,000 against thisBorrow $80,000 secured against the property
But this will be a bit painful for the banks to implement.
What about the alternatives
A. You lend him the deposit – $25k under a written loan agreement on arms length terms.
B. Parents property used as additional security and he borrows $105,000
C. Gift
I would favour A.

LOL!!! Go with opton C.’Gift’ Its the done thing apparently…see here

• This reply was modified 7 years, 7 months ago by  Schnake.

[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

September 4, 2016 - 8:29 pm

Corey Batt wrote:

So long as your lender allows it – split the existing PPOR into two components – portion 1 for PPOR use, Portion 2 to be used for the investment funds. Rough number example in an example where you would use 250k:
Initial Loan:
*400k loan facility, 150k loan remaining, 250k in redraw available
New Setup:Loan Split 1 (ppor debt):150k facility, 150k owing – $0 redrawLoan SPlit 2 (ip deposit): 250k facility, 0 owing – $250k redraw available
You can then draw from the split as needed for the deposit, whilst reducing your PPOR non deductible facility improving borrowing capacity. Likewise the IP leverage is maximised without requiring cash funds to be chipped in + a clear line is defined by what is personal vs investment debt.

Thanks Corey. This is different again (I think). So in other words; refinance PPOR and secure new tax deductible loan/split against PPOR? Without actually increasing the amount owing against PPOR because I’m not re-drawing. I know it’s technically not, but kind of like a off set account? Why not do this against existing an investment property loan?
Also, does anyone know if the NAB offers this?

[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

September 3, 2016 - 10:53 pm

Thanks Terry et al. Makes complete sense… It seems the broker I have consulted is sending me up the wrong path by suggesting accessing PPOR equity via redraw for an IP purchase. (Or I am have misunderstood something… Despite you all having managed to explain it to me far more eloquently).

• This reply was modified 7 years, 7 months ago by  Schnake.

[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

September 3, 2016 - 6:54 pm

Thanks for the

Ethan Timor wrote:

Good thinking wanting to minimise the PPOR debt, I reckon. It’s not tax deductible so overall it costs you more than IP debt.
Why isn’t the equity in the IPs accebible? I would probably refinance at least one of the IPs, set them up with a redraw or offset facilities and gain access to the equity there. Simple
Hope this helps?

I say not accessible, short of re-financing… I suppose what you have suggested is what I was thinking… but was interested in seeing if there was another way.

rhodesv wrote:

If you have enough equity you can borrow 105% (ie purchase price plus cost). I borrow 80% secured against against the new IP and a second loan for 25% secured against my PPOR. Over time as the IP has increased in value I have secured both loans against the IP. I pay IO on the IPs and as much as I can on the PPOR, well in excess of the P&I required payment. I also capitalise running costs, such as repairs, rates (but not interest) paying from a LOC and claim that interest and put the extra cash into my PPOR mortgage.

…and here is the other way I was looking. Thanks for this suggestion.

So in short, would it be fair to say I should not be touching my accessible (via re-draw) equity in my home loan to pay a deposit?

[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

March 9, 2014 - 10:29 am

Terryw – No I don't use the LOC for personal expenses…. Strictly for IP related expenses, council rates, etc.  

[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

March 9, 2014 - 10:11 am

Thank you to everyone for your responses.

TerryW – I'm not quite sure how you came to the conclusion that  little or none of the interest on a LOC linked to an 2 IPs would not be tax deductible. The LOC is in no way linked to my PPOR loan. Maybe I have incorrectly explained my situation and it has been misunderstood.

[SchnakeParticipant@schnakeJoin Date: 2014Post Count: 11]

March 8, 2014 - 4:07 am

Thanks Jamie. You are correct, the LOC is covering two IPs and I have a standalone loan against the PPOR.

If I untangle, how does one apportion the loan value of the 2 loans? 

Is it a matter of saying when I bought IP2 I had 'x' remaining on IP1, therefore that's the loan for IP1 and what's left goes towards the loan for IP2?