Howdy, Just want to look for suggestions for best approach to getting a loan for an investment property.
I earn $100k per year & have a home worth $700k with $130k still owing on the mortgage.. As part of the mortgage there is $160k available via redraw.I want to buy an investment unit worth $350k & put down a $60k deposit, would it be best to redraw the deposit from my existing mortgage or get the deposit from equity in my house..
If you use redraw it will not be good for tax reasons as your loan will be part investment and part personal – how would you pay down the personal bit first.
I think your best bet is to set up a separate split, interest only, and use that as 20% deposit and then borrow the rest as another loan.
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
Thanks terryw , I'm not quiet sure how that works but I'll read up & investigate.. Cheers!
Hi ss -ss
Welcome to the forum.While it is a tad messy, you could indeed do this. It all comes down to what the funds are used for , rather than what is securing them. So while it would be better to 'split ' the loan first, you still could 'redraw' (which is borrowing form yourself) the 60k plus enough for closing costs (ie stamp duty, solicitor etc etc) and claim the interest only on this amount. If doing it this way, I would suggest use a round figure (ie if you need $71,219 use $$70,000) and you need to work out how much interest you pay on that amount each year – but it would be tax deductible. Challenge is you need to take into account interest rate adjustments during the year in any calculations, which is where it gets a trite messy. Still, there's always more than one way to skin a cat – and 20 minutes with a calculator may be the solution for you each year rather than bank fees, and more loans. Either way, all the best.
Cheers.
It depends on your long term goals.
If you want to build a property portfolio over time, you take one approach, if you just want to own one IP, then there is another approach to consider.One the presumption you are looking at building a portfolio over time, than for flexibility, get your home revalued and refinanced setting up a separate facility just used for investment, the amount will be guided by your serviceability and you r end goals but > $120k preferably. . Get an offset account linked to your own mortgage.
You use part of the $120k for the deposit and costs and borrow the remaining from another lender (so not to cross-collaterise).
You then use finance wisely to debt recycle to reduce your own interest costs (non deductible) while funding the IP from your new facility.
Good luck
GregThanks very much for the replies.. I have my bank guy coming over tomorrow so will see what they have to offer..
Cheers,
DonHi Don
Hate to say if he is from the Bank say a mobile lender unlikely he will have the knowledge or experience to structure it correctly.
Some of things client have told me bankers have told them makes me shudder.
I agree the same with some Brokers but that is why you try and use someone with half a grain of experience.
Richard Taylor | Australia's leading private lender
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