All Topics / Legal & Accounting / redraw or offset for your PPOR loan ?

Viewing 10 posts - 1 through 10 (of 10 total)
  • Profile photo of Coogee126Coogee126
    Participant
    @coogee126
    Join Date: 2009
    Post Count: 51

    Hi therer, gurus

    I got bit of cash and want to pay down my small remainder PPOR loan competely. I was thinking to pay it down then refinance whatever amount out in the forms of LOC for future purchase.
    However My banker told me that due to the bank policy change, they can only do 60% to 65% LVR .. as I already withdrawl some of the euqity out over the years.. if they use 60% LVR that means i wont be able to withdrawl anything out as LOC , even I paid off PPOR loan.

    Hence I have a option of putting in offset Or pay down the loan and redraw.

    i want to know if the interest on the redraw ( from my PPOR loan) can be deducable, providing it’s for investing purpose and not mingled with any personal use ?

    i think the answer is yes. but not 100% sure.

    hope to hear your advise.

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    What type of property is this? You shouldn’t be restricted to such a low LVR – it may be related to your serviceability instead and the banker isn’t clearly explaining this.

    It’s still possible to draw out equity from a freehold property upwards to 90% LVR with many lenders.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    If you pay the loan down to nil and redraw and invest you should be able to claim all the interest provided there are no detours.

    If the loan is not paid down to nil then it will be a mixed purpose loan and you will have to apportion./

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Coogee126Coogee126
    Participant
    @coogee126
    Join Date: 2009
    Post Count: 51

    thanks Terry.. i think the same as you…that should be how the logic goes. luckily my PPOR loan is not a big amount.

    this is a better than offset in my view, as offset will lose the interest deductbility.

    my banker said it’s the purpose of the funds that determines the LVR, so if you buy investment properties, the current LVR is only 65% as per banks policy.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    so if you buy investment properties, the current LVR is only 65% as per banks policy.

    you should never take tax advice from a banker!

    It is the use that determines deductibility. If you borrow to buy a main residence and then move out and rent it the interest will be deductible at this point even though the purpose was to buy a main residence. the funds are being used to own an income producing assets and are therefore deductible.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Time to start using an investment focussed broker, instead of a product shill for a bank. Why limit yourself to accessing half a dozen products and one lenders policies, when you can leverage off the policy and products of dozens of lenders and thousands of products.

    That way you can pull your LVR up to 80%+ and expand on your terms, not one lenders restrictive policies.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    you should never take tax advice from a banker!

    Wise words!

    The ones I’ve personally dealt with have been more concerned with up-selling products rather than taking care with the advice they give.

    Which lender are you with OP?

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    you should never take tax advice from a banker!

    Wise words!
    The ones I’ve personally dealt with have been more concerned with up-selling products rather than taking care with the advice they give.
    Which lender are you with OP?
    Cheers
    Jamie

    And no one should take lending advice from a banker either!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Matt McLeanMatt McLean
    Participant
    @matt-mclean1
    Join Date: 2015
    Post Count: 4

    The LVR definitely doesn’t sound right. A lot of Lenders have pulled back to 80% with recent investment lending changes but a still a few offering LVR’s around 90-95%.

    Matt McLean | Rams Home Loans
    Email Me

    Profile photo of RickRick
    Participant
    @rixter
    Join Date: 2003
    Post Count: 15

    hope to hear your advise.

    @coogee126 You need to run your situation past an experienced financial strategist so you can attain your investment goals/financial objectives.

    If you’d like to contact me I can refer you onto a very experienced strategist who has helped me over the past 13 years who has also attained financial independence many years ago.

    Rick | My Property Investing Tools
    http://mypropertyinvestingtools.com
    Email Me

    FREE Download >> Click my website for the Tools I used to Build a Multi-$Million Portfolio & Retire.

Viewing 10 posts - 1 through 10 (of 10 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.