All Topics / Help Needed! / Duplex build. Loan advice needed.

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  • Profile photo of chetnik73chetnik73
    Join Date: 2007
    Post Count: 47

    Hi All

    We are a couple looking to build a duplex on our block with the aim of one being our PPOR and one being an investment for the kids.

    What do people suggest as a correct loan structure for such a project? PPOR P&I and investment as Interest only?

    Also does the below project sound feasible? Our details below

    Current house and land valued at 1.4mil.

    510k mortgage outstanding.

    Income of 170k for my and 145k for my wife.

    Also own an investment property owing 380k valued at 480k with a $430 weekly return. No other debts.

    Duplex build cost 1.1 Mil for both. Based on comparative duplex values in our area we believe each duplex would be valued at 1.2m on completion with an estimated rent of $1000 per week.

    We contacted one broker and he suggested three seperate loans. One for existing debt, one for ppor and one for interest only.

    Any advice on structure or feasibility of the above project would be great.

    Thanks in advance





    • This topic was modified 3 years, 8 months ago by Profile photo of chetnik73 chetnik73.
    Profile photo of Richard TaylorRichard Taylor
    Join Date: 2003
    Post Count: 12,024

    Hi Chetnik

    I am assuming from the post that you intend to knock down the existing house and then construct 2 new dwellings on the land.

    If this is the case the Tax deductibility would normally be based on the sq metre of each dwelling and is likely to be an interest only loan during construction.

    As far as structure is concerned we would need a little more information to provide a suitable response.



    Yours in Finance

    Richard Taylor | Australia's leading private lender

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

    There is a simple way to increase deductions and that would be to borrow 100% for the construction. wait till titles are separated, split the loan and then pay down the non-deductible portion.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide)

    Profile photo of Steve McKnightSteve McKnight
    Join Date: 2001
    Post Count: 1,763

    You have some savvy people who have responded already.

    All I would add is to make sure your loan product fits within the flexibility and features you need. Lenders sometimes sell you a loan ‘burger with the lot’ (which is top of the line expensive), when all you are really after (and need) is a cheeseburger.  For instance, fixed loans sound good, but you lose flexibility to payout early.

    Oh, and the last thing I would say is this: don’t get too distracted by the interest rate. Be happy to pay more for the loan that is right for you.


    Steve McKnight | Pty Ltd | CEO

    Success comes from doing things differently

    Profile photo of JoritJorit
    Join Date: 2021
    Post Count: 0

    The person above wrote an excellent idea. Really, what if you take out a full construction loan and then just split it up? That would reduce the risks in case you can’t split up the property.

    Profile photo of AreliWyattAreliWyatt
    Join Date: 2023
    Post Count: 0

    Though my response is late, I hope it can still be helpful to you and others.
    With such a significant investment, loan structuring is crucial for optimizing your financial strategy. The idea of having P&I for your PPOR and Interest Only for the investment property sounds reasonable, as it can help you manage cash flow and maximize tax benefits.

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