Sounds like the finance clause may have been left a bit vague. It is a good idea to say something like subject to a loan of $xxx with ABC Bank – specify the exact amount and the name of the bank.

High growth cannot be sustainable in the long run or nobody would be able to afford a house. I guess all you have to ask is can it keep on happening in the foreseeable future?

ATO looks at the purpose of borrowings. So increasing your loan on the IP to pay for the New PPOR would be personal use = non deductible.

A way around this is to sell the property to your trust or partner. eg if you own 50/50 you or your partner could buy out the other party. They would need to borrow to do this and the borrowing would be investment purposes. Money released would go into the new home. But there would be stamp duty payable. So you must work out if the savings are worth the cost and hassle.

i beleive that all loans should be IO. This will result in reduced payments so you can invest the savings elsewhere – and it still gives you the option of paying extra off the loans if or when you decide. Any spare money should be in the 100% offset account – which hopefully you have set up under the breakfree package. Put all your savings in the offset and use this for the next property.

Yep, the settlement date has to be decided up front. There are often clauses which state if the contract is not dated, settlement is to occur xx days from the date of signing – 42 days in NSW usually.

You can only settle in the future, so I assume you mean 15 June 2008

And you can settle whenever you wish if you can find a buyer willing to agree. Generally investors would be happy for a long settlement as the price can be agreed upon now and they can receive any capital growth between now and settlement.

I guess you don't have any cash lying around and you are worried about having a large loan on your new PPOR property and smallish loan on your investment.

If you meant, in the top post, that you would increase the existing loan to use as deposit for the new purchase, then the extra interest incurred on the increase would not be deductible as the purpose of the borrowings would be personal use.

If you kept things as they are the original property would still be slightly negative geared, so there would be some tax savings. But you would have a large loan on the new one and this interest would be non-deductible.

A possible solution is to sell the existing home and then put the proceeds on to the new loan. $120,000 is a fair amount and the interest saved would be around $9,600 per year. You could then reborrow the money to buy another investment property. This would be converting approx $120,000 in non-deductible debt into deductible debt. The major downside of this is the stamp duty you would have to pay on the new replacement investment property.

Getting rejected for my first loan and not going elsewhere was my worse mistake. If only I had purchased that property!

Another was selling a good property to get into 'wraps'. If only I had kept that one!!!!!!! Oh no!!!!!!!!

Brent

That is a lot of fees! Surely there is a better bank out there with no fees?

From a lender's perspective, they will allow you to borrow roughly 5 times your annual income – including rents. Very rough guide.