Hi everyone,
I need some advice on the following:
Currently have IP with outstanding loan of $42,000 with offset account attached which has a fluctuating balance of between $10,000 and $40,000 to eliminate interest. Also have $23,000 in Redraw – House valuation approx. $215,000
Purchased a block of land for $140,000 with $100,000 loan 1 year ago – Balance outstanding $96,000. Loan is for 2 years fixed at 6.79. The interest is not tax deductible as no income derived from this.
We wish to build (Rental) on the land and have been advised by our lender, C’wlth Bank, that we would need to start another loan incurring establishment fees and monthly fees as existing loan is fixed for another 12 months.
We would like the loan for the building to be variable so that we can use an offset account and also claim the interest on the building and the land loan against tax.
We would need to borrow approx. $100,000 to build, as we would sell some shares ie $35,000 to help with construction costs (husband is a builder).
Is there a way around having two loans for this.
We also have a beach home – no loan – Valued at approx $200,000.
Would appreciate your input.
You probably can claim the interest on the land loan if your intention was to build. Better speak to a good accountant.
Terryw
Discover Home Loans
Parramatta
[email protected]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
Unfortunately, the only way to have one loan is to break the other. However, you say you’re fixed at 6.79% enquire with your bank the “ERF” or Economic/break cost of the fixed rate. You may find it may be negligible if any at all. However, generally in a falling market the exit fee increases (as the lender would prefer you to remain at a higher rate).
Regards,
RobRob Whyte
Certified Mortgage Consultant MIAAPrincipal & Licensee
The Mortgage Gallery
e [email protected]Winner 2004 National Office of the Year!
Accredited with over 27 lenders nationally. 15 years experience in commercial and residential lending, ask me anything, if I dont know, I’ll find out!
hi Sitting on the Fence
you need to talk to an accountant as not sure how you bought them in the first instance you can capitalise the loan with the veiw to builds and alender will capitalise up to 12 months so it depends on who and how you structured your loans even talk to a broker, Finance Friend I think is one.
sorry to say this but it depends on what you have already organised to make the best of what you have already got.
my non advice as I don’t give advice is to drag the 160k out of the holiday home and use the refinance loan to build its the easiest.
but my advice is do nothing until you have professional advice from someone that has gone thru you paperwork or structureshere to help
Hi Sitting on the Fence
Do you actually need to have one loan only? No. Why not have 2 loans? ie keep your existing loan and apply for a new separate construction loan.
From what you have said I believe you could get the second loan with no establishment or monthly fees EVER. You actually have quite a few options.
Feel free to call.
Regards,
HilkoHilko Siegers
Licensed Finance Broker
MIAADirector/Licensee
Tricord Financial Concepts
Western Australia
[email protected]
0423 300 519Hi,
Terry is absolutely right in that if you bought the land for investment purposes that is you were going to build an investment house on it to earn an income at some point then the interest payments are tax deductable – I have checked this with the taxation department – the important issue is that you demonstrate that it was purchased as an investment…Cheers
MIKALA
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