AS long as you are in the same industry, like the same job with a different employer, it is not much of a problem as long as you are a permanent employee. If you are on a short contract, they will start to worry, and if you are on probation they will worry even more.

If you think long term, LMI can help you buy much more property which could grow

Hi

Don't worry too much, one of my friends owed $230,000 on credit cards at some stage!

You an tell the lender you will be using some of the funds to pay out credit cards and this should mean they won't need to be taken into account for serviceablity. But be careful. Some lenders will be alarmed if you have too many credit cards you wish to pay out! Readycredit is just a credit card with a cheque book facility, so it is treated the same.

If you cross collateralise the properties you could have one big loan, or maybe even two splits. So if you pay one out you may not be actually exiting the loan, but just reducing it and changing securities – which may be a much cheaper fee. So it may be possible to avoid the DEF this way.

Bringing a loan down is not a refinance. Refinance is when you pay one loan out with another – nearly always with another lender.

So you are paying the shortfall of the repayments less the rental income from the LOC. ie you are borrowing to pay for expenses. Many are not in favour of this, but I believe there have been a few recent private rulings by the ATO accepting this and allowing the interest on interest to be claimed. This is similar to those cashflow loans.

Legally I believe it is the date that the contract is entered into. ie with property the date of exchange. If there are conditions, then the contract may not be binding until these are met, but the date of the contract will still be the date of sale. I also believe the ATO also follows the date of the contract to be the date of sale/purchase for tax purposes.

check out http://www.lawcentral.com.au for their agreement on buying property together

Matt

If you pay off the PPOR loan by $70,000 you will be saving approx $5,600 pa and if you then re-borrow $70,000 from this loan for the new IP you will be paying an extra $5,600 in interest, but this should be deductible. Assuming a 20% marginal tax rate, you would be getting back about $1,120 in extra tax per year.

If you just use this $70,000 from the offset, you will not be able to claim the extra $5,600 pa in interest you will be paying on your PPOR loan. This is because the $70,000 won't be borrowed funds.

It is hard to know what to do in these situations isn't it.

House 2 has doubled in about 8 years. If you hang onto it for another 8 it could be worth double again. By selling it you are getting rid of the goose that lays the golden eggs! it is also positive geared and probably making you about $100 pw which can help pay the interest on the PPOR loan. The rent will keep rising too, helping you more and more.

But, you have to pay tax on this rent, and cannot claim the large interest on your PPOR loan.

So work out all the costs associated with selling such as agents legals, CGT etc. The work out all the costs associated with buying a new property to replace this one – which you may do later.

Then work out how much you would save if you paid out the proceeds into the PPOR loan. How many years would it take to make this cost back?

If you really want to keep and sell at the same time, you could sell to a trust you control. This way you avoid agent's fees and you get to restructure. Or if the property is jointly owned, one person could borrow to pay out the other and put the proceeds ont he PPOR loan while being able to claim more for the existing property no 2.

Also consider, if you are going to use a trust, ways to minimise CGT. eg. you could sell part to a trust now and part later – making CGT payable over 2 years (you may have a lower income in future, so less CGT). You could also lease option it to your trust etc.

Fully insured loans incur LMI regardless of the LVR. The LMI companies place extra restrctions, more stringent than the banks such as  Postcode restrictions and the main one Maximum exposure which means they will only lend up to a certain amount per client. If you are planning on buying many properties, then will limit you quickly.

Another potential problem is if you are using full docs and then go Low or No Docs, it won't work if the LMI company already knows your employment details.