You should probably talk to your accountant, but i would think option 2 to be the easiest – subject to you disclosing the purpose to the bank. make a diary note that you have told the banker this in case something happens in the future.

You might need a simple loan agreement as evidence to the ATO – but it is unlikely they will be too fussy on something like this between spouses.

If the title is in two names I wouldn't bother with the guarantee, but get the loan in both. you can then on lend the money to the wife or to her company. same rate as you are charged by the bank. Net result is the wife or her company can claim the interest.

Thats what you get for going with a non-bank lender – trouble.

You seem to be pretty much stuck, you also want to make sure that you don't dig yourself into a deeper hole with them.

You will need to set up a separate loan on that property, preferably a LOC. Take money from this and use it for deposit for the IP. Borrow the rest from another lender.

Changing your existing home to a LOC won't help I am afraid – you will be worse off with tax. You need two separate loans.

Sounds confusing

If you have funds in an offset account – ie a separate account, then there are no real consequences when taking money out as it was never paid into a loan. The interest will increase, but should be still deductible.

For the other matter, the ATO don't care about  the explanation. They will look at the funds and where they went. If you took money from a loan then these are borrowed funds. If you borrowed some more funds and paid back into the loan you borrowed from then you are really just refinancing that loan so the interest should be deductible.

Where you will have a problem is that you had one big loan, not split, so when you repay that deposit borrowed temporarily you cannot just plonk the funds on the deposit portion, but the deposit must go to the loan in proportion to the borrowings. hard to explain, let me do an example.

Your loan is $90,000 and you take $10,000 for a deposit temporarily. your total loan is $100,000 and it is just one account and one loan number.
90% is personal and 10% investment. So you should be able to claim 10% of the interest.

You then set up your LOC and decide to repay the 10% borrowed temporarily from the home loan with money from the LOC. Because the loan is one account that $10,000 must be attributed in the portions above. ie only 10$ of the loan can go to the investment portion because the investment portion is only 10% of total loan. Same with each subsequent deposit.

So what you are creating is a nightmare! sorry to say!!! It will be very hard to manage the workings out at tax time. The $10,000 borrowed from the LOC will only be 10% deductible etc. After a few months this will be very hard to work out.

Not sure what you can do to rectify it as it has already been done.

bouncecf – the last post before your's was 7 years ago! You have dug up an old thread.

As a former broker I was recently approached by a friend. He had been pre-approved for a loan with a certain bank, thru the broker. Then he was somehow contacted by the bank direct and offered an extra 0.15% discount if he went direct. This would result in about $1000 in savings pa and he wanted to know how he could tell the broker he was not going ahead.

There are some people out there who approach brokers, get all the free advise on structuring their loans and then they jsut go to a refund broker tell them the loan they want and then get some money back – the poor broker gets nothing.

Then there are the clawbacks – these are severe. If someone uses less than 75% of their LOC, the broker may be forced to repay all the commission they received for settting it up.

I would suggest brokers charge a small fee upfront, maybe around $500 to prevent refund clients abusing their services and to stop tyre kickers.

You might have a binding contract, but nothing is 100% sure until you have the cash in your bank account. If the sale doesn't go through you will still need to pay the solicitor for their work done, but you may be able to claim this from the purchaser in addition to keeping the deposit.

whoa – beware!!! The redraw is totally different from the offset account. Some lenders say they are the same but there are serious tax consequences. This may not make a difference immediately, but if you were to ever move out of your current house to rent it you may, or will, pay more tax.

Basically when you deposit money into a loan it is a repayment. When you take it out again it is new borrowings. Having an offset avoids this problem.

You will both be jointly onlending the money to your wife.

Bankwest just sent a notice around saying they were increasing their LVRs from 85% back to 90% for new clients. ANZ also recently increased their LVRS too I think.