Our situation currently is as follows:
$185K owed on PPOR (made up of $37K variable at 9.04%, $148K fixed to Nov 2010 at 8.04%) – Valuation of $380K
$323K owed on IP1 (fixed at 7.35% to Aug 2010) – Valuation $360KWe are looking at purchasing another IP for around $370K with a loan of $388K to maintain 80% LVR
We have $56K avail in redraw on the variable component of our PPOR loan.
All our loans are currently with Suncorp.Questions:
1) Are we likely to get a discount on the basic variable rate from Suncorp if the new loan was with them?
2) If we were to shop around could it be to our advantage?
3) Should we just redraw everything on our PPOR and use it as a deposit for a completely new loan?Any advice would be appreciated, and if more info is reqd please let me know.
Thanks.
Hi Kuade
Firstly from what you have set out a clear case of the securities being cross collateralised and not an ideal situation (for you anyway it is just what Suncorp will want to see) in going forward.
Secondly remember that using a redraw is not an ideal tool and you would be better off to have a totally separate loan which you use as deposit and cover your acuisition costs.
Thirdly I am not one for having all my eggs in the same basket and believe you could probably do better. This will certainly be the case if you ever decide that you want to increase the LVR to > 80% to keep going with your investment goals as Suncorp will charge LMI on the total loan exposure due to the way in which the loan have been set up.
Email me if you want an alternative on your structuring.
Richard Taylor | Australia's leading private lender
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