I am currently refinancing my portfolio and want to do either of the following.
I have 3 loans and want to take them up to 90% (bank has ok this) allowing me to access the equity. Loans will then be stand alone. I would then take this equity and sit it in an offset account. Which would negate the interest until it was utilised. The funds are to be used on another investment property with another lender.
I am just open to any opinions on what I would like to do.
Does it affect me tax wise or just create more work for the accountant due to taking equity from one property and using to fund another.
Would a LOC be better even though it inccurs a high interest rate.
Not sure how that would be treated in tax. If you do it make sure the funds in the offset are not tained by mixing with savings or connection with borrowing the money and the later investment may be lost.
Why not just increase loan and get the money out and then pay back into the loan. Redraw later when needed (make sure it has redraw first!). Or set up another offset on another account – and then use only for these funds.
THe LOC would be easier – the extra rate may not make that much difference – and you may even be able to negotiate a discount.
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
What about LMI? When I asked the same question to my mortgage broker he told me that I will have to pay LMI for all of the properties if I borrow more than 85%.
Just curious to know bit more about IP.yep. LMI is payable on all loans over 80% usually.
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
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