THe trouble you will face is that many if not most lenders will use the same mortgage insurer.

Say your current PPOR loan is $250,000 and you have $150,000 in the offset and need $75,000.
This is what you would do:

Split the current $250,000 loan into 2 portions
a) $175,000
b) $75,000

Once split pay the $75,000 from the offset into loan b). Make sure your lender won’t close the loan though. You might have to leave $100 outstanding.

Then redraw the $75,000 and pay it directly to the property purchase – solicitors trust account etc.

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If you don’t have time to do that then you will end up with a mixed purpose loan. Part of the loan will relate to the PPOR and part for the investment property so you will have to apportion the interest. This si no big deal, but it can become one if the loan is PI as each repayment will be reducing the deductible portion.

The ATO allows a mixed loan to be unmixed by refinancing and splitting. So you can do it later, but just do it quickly if the loan is PI.

BTW the B loan should ideally be Interest Only.

If your interest rate is 5% and you use the offset account money you will have to pay an extra $3,750 in interest per year and this would not be deducitble.

If you paid $75k off your main residence debt and reborrowed it you might pay the same interest but would now have an extra $3,750 in deductions each year. that might mean $1,800 extra in your pocket per year for many years to come.

Make sure you split the loan before you pay it down otherwise if you deposit and redraw you will have a mixed purpose loan.

I think they should make things harder for those buying their second and subsequent properties. Tighter lending as well as land tax and perhaps scaling back the CGT and negative gearing benefits will help this. Increasing RBA interest rates will too, but this will hurt owner occupiers.

Not a grey area Ethan.

Under the common law risk passes on the date of contract. This has been modified in a few states so that risk only passes at settlement. The contract is also relevant. I think in QLD the standard contract has the purchaser agreeing to wear the risk. So if you enter into a contract to buy a house and the house is flooded the vendor may be able to insist on settlement.

Don’t you think it would be a good idea to get some proper legal advice about this matter?

Time is ticking…

I have helped two separate Aussies who have purchased in Thailand and Indonesia.

Each had their property ‘stolen’ from them.

The guy in Thailand had a company set up to own the land, someone else forged signatures to transfer the shares in the company to someone else and the company then sold the land to an unsuspecting buyer. This guy has been going through the courts there to get his money back – over $1mil AUD – and has finally won, but it is still ongoing with the recovery of the money.

The guy in Indonesia had something done to him at settlement so that the property was never in his name. He also has been through the courts and finally won, but then had trouble enforcing the judgment. The person had rented it out to the mistress of the police chief etc etc. His legal fees and expenses have cost what he paid for the unit.

My advise would be to make money in Australia and then spend it overseas by renting.

No.

If you mean tax agent then they advise on commonwealth legislation.

Ignore what the bank is suggesting they will make things worse.

You need to pay off the loan and reborrow.

I am not sure I understand that.

have $53,000 been borrowed by slitting the $220k loan and into 2 with the $53k split being paid into an offset?

If so simply pay back hte $53k loan and reborrow again at the time you wish to invest. Pay directly from the loan account or set up a new offset account empty of funds add transfer the borrowed money there temporarily to pay out to the investment. Make sure paying the $53k back doesn’t close the loan. If it does you should pay it back less a small amount and then claim 99% of the interest.