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Hi i want to sell my existing PPOR to my HDT and then use the equity to purchase a new PPOR and turn my old PPOR into a IP. I have been advised if i used the same Lender i can borrow more to purchase my new PPOR and have a bigger deductible debt on my IP and less on my PPOR. But i would have to cross colateralise the loans.
eg. PPOR current value $600 x 80% lend = $480k minus existing debt of $250k = $230k for deposit new PPOR. Thus having a debt of $480 on IP. But if i use same lender can borrow the whole $600k – minus $250k = $350k for deposit for new PPOR but only if loans are crossed.
I was under the impression that you don't want to cross loans is that correct? Is there a better way to do this?
thanks
What you would want to do is to make your new IP loan for the trust as high as possible and use any spare funds to make the PPOR loan as low as possible. A simple way is to cross collateralise. This not ideal, but may be ok for a few years until the IP increases in value and can be released.
Another way is to settle on the PPOR first and then use a LOC against this place for deposit to lend to the Trust for the IP. Then net result should still be the same but without crossing. Since your trust is buying your property, timing shouldn't be an issue. You just find the new PPOR first and then settle everything on the same day.
And make sure you get very good advice on the HDT setup, or your deductions could be denied by the ATO
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
