This is all very interesting to me,as i am new to loc usage,& am concerned about how to use it to my advantage.I am curious about the suggestion of buying a property first with loc,then adding value-would you get a bank valuation BEFORE you buy anyway?? Just in case,even after adding value, that the bank undervalues when you go to re-finance for more equity??[confused2]
dwong8, the tax office doesn’t have a problem with you using rents etc. to pay down your personal loan AS LONG AS you pay the interest on your IP loan. It’s where that ‘capitalises’ that they have an issue.
Misty, if you have a LOC on your PPOR with available equity of $160K, you could be in a much better position to buy an IP at around $145-150K, as you would be able to settle much quickly than if you had to wait for finance etc. If you were able to buy under market price, (cos of a quick sale, or a planned reno), then you could purchase for cash, own the title deeds cos you own the place free and clear, and then reno, or go to a bank for a loan.
Part of your purchase research told you that it was undervalued, or you could add substantial value by renoing, so the bank you approach (it could be any bank, you are not limited) should value it at (hopefully) your anticipated market value.
If it doesn’t, then your research was faulty, or perhaps you try another bank.[biggrin]
Cheers
Mel
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