Forums / Getting Technical / Finance / Refinancing Buy and Hold Investment

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  • Profile photo of ijcijc
    Participant
    @ijc
    Join Date: 2002
    Post Count: 28

    Hello- I have one investment property that I purchased 4.5 years ago at 295k + 10k costs= 305k. It is an interest only investment loan coming out of the initial 5 years interest only period. My PPOR has 100k owing on a property worth about 700k. I am seeking advice on whether to re-finance with current bank, who I am very happy with, at 305k interest only again, and focus on paying down the 100k, or just let it revert to principal+interest. Alternatively, should I re-finance interest only against valuation of the investment property, as the property would probably sell for 365k min. and deposit the additional cash back into the PPOR. Either way I hope to use equity to purchase another property in the near future once I am sure that my current employment is secure.Thank you for your ideas.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Personally i am believer of the Never Sell brigade so would not be selling an IP and paying CGT just to pay down a small non deductible debt.

    If you pay down the loan probably the first thing you will do is then use as security for a loan to fund a new IP.

    With interest rates as low as they are if you reqlly want to focus on paying down the PPOR debt why not convert this to P & I linked to a fully 100% transactional offset account and use this to reduce your interest.

    Just make sure your Bank dont cross collateralise your loans if you stay put with the same lender when you buy your next IP.

    Most have absolutely no idea how to properly structure a home and IP loan. 

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of ijcijc
    Participant
    @ijc
    Join Date: 2002
    Post Count: 28

    Thanks for your feedback. Don't think I made it clear that I'm only thinking of refinancing the investment loan instead of letting it revert to principal and interest, and I thought if doing this why not refinance at what it is worth now. Think I totally confused myself :)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    oh sorry maybe i misread the post.

    Definately look to refinance it again especially when you have a non deductible debt.

    Maybe time to review the rate and features to see if you could better.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

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