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  • Profile photo of craig123craig123
    Participant
    @craig123
    Join Date: 2012
    Post Count: 26

    Hello,
    Our PPOR is essentially paid off, loan is still open however we are 85k over.

    If were to purchase an investment house. We would have to pay the loan out which leaves us 85k.

    We want to keep approx 50-60k cash.

    We have about 80k equity also at the PPOR.

    Should we use that equity towards a deposit for the investment or should we borrow against our PPOR for 20% deposit then another loan against the investment property? This way i beleive if something went really bad with the investment then its not tied to our PPOR?

    Thankyou all.

    Cheers

    Profile photo of JasonJason
    Participant
    @jstan3
    Join Date: 2018
    Post Count: 0

    It’s probably best you talk to a few financial people like an your accountant, your mortgage broker, and a financial planner to understand your specific circumstances.
    They will be best placed to give you information on the pro’s and con’s of each option
    If you don’t have a mortgage broker, Chris Berry from find a better rate is really helpful

    cheers,
    Jason

    Profile photo of Christopher BerryChristopher Berry
    Participant
    @chrisberry
    Join Date: 2018
    Post Count: 1

    This reply has been reported for inappropriate content.

    Thanks, Jason, Appreciate that!

    Hi Craig, To answer your questions, as long as servicing of the debt is evident then there is no reason that this amount would need to be closed. I’m assuming it operates as a rainy day fund and as long as you can afford it, then yes you can certainly keep it there.

    When you purchase a new property, you would need to have a deposit available to provide to the agents which is generally 10% and you can borrow back as part of your loan ultimately borrowing 100% plus costs.

    There are a couple of structures that can be considered which is cross collateralising the properties and using the overall value of two properties as one application OR completing separate applications so that all loans are stand alone.

    Everyone’s circumstances are different and the structure is a personal preference but I would seek advice from your accountant on the best way moving forward for your circumstances.

    If you would like to discuss further, please give me a call. No obligation to proceed with me just want to make sure that you understand the process moving forward so that you make the right decisions.

    Contact number is 0477 212 840 and email address is [email protected].

    Look forward to hearing from you shortly.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    Should we use that equity towards a deposit for the investment or should we borrow against our PPOR for 20% deposit then another loan against the investment property?

    Isn’t this the same thing?

    Generally a loan for a main residence purchase will have a lower interest rate for a loan for an investment property purchase. So one strategy is to borrow against the main residence, debt recycling along the way and using these funds for the investment. this way you will get at least part of the investment loan at owner occupied rates, yet still maintain deductibility of interest.

    You can also avoid using 2 properties as security for one loan – cross collateralising securities.

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

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

    Profile photo of MelbourneExpertsMelbourneExperts
    Participant
    @melbourneexperts
    Join Date: 2019
    Post Count: 0

    Organise a new loan split on the PPOR for 20%+ purchase costs, then borrow the residual 80% against the new purchase.

    Or if you have the equity and plan to make multiple purchases, borrow out via a separate split as much as you can up to 80% LVR on the PPOR, then you can draw from this via this as needed for the purchases. Ideally use a lender which will allow you to split the loan account without application for the best use.

    MelbourneExperts | Melbourne Finance Experts
    https://melbournefinanceexperts.com.au
    Email Me

    Local Melbourne Experts, The Best Advice

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