Equity cash out, placed into PPOR loan account?.

Hi Simon,

Sheesh, some Banks are good for nothing !!

It has just all come through & it has landed in my variable PPOR home loan account.

So, have they (or you) OPENED an Offset Account against any Mortgage account? Or is there still NO Offset Account at all? That is so slack – but can be quite typical of some banks (have had quite some arguments with one or two….).

I don’t have enough knowledge to know just how bad any ramifications might be, with having the money appear in your Home Loan account like that.

I would HOPE that the error can be shown to be not YOUR error, and the situation put right quickly. One of our financial types would likely be able to offer some good ideas around that kind of thing. They often have to direct banks on behalf of their clients (even teaching them to suck eggs at times, from what I hear…) ;)

Benny

You have tax issues.

Where did the money come from? Was it a new split loan? Give me some figures as an example and i will tell u how to fix it.

I am not sure I understand that.

have $53,000 been borrowed by slitting the $220k loan and into 2 with the $53k split being paid into an offset?

If so simply pay back hte $53k loan and reborrow again at the time you wish to invest. Pay directly from the loan account or set up a new offset account empty of funds add transfer the borrowed money there temporarily to pay out to the investment. Make sure paying the $53k back doesn’t close the loan. If it does you should pay it back less a small amount and then claim 99% of the interest.

My response still applies to this. Just pay it back into the loan and reborrow when investing.

Ignore what the bank is suggesting they will make things worse.

You need to pay off the loan and reborrow.

Hi Terry,
Your words here reminded me of something that you have warned of in the past:-

Ignore what the bank is suggesting they will make things worse.
You need to pay off the loan and reborrow.

I think the words went something like “Don’t take funds out of an Offset account to become a Deposit on an IP. Instead, use those Offset funds to pay down a Loan, then BORROW extra from that Loan as needed.”

Something to do with keeping $$ tax deductible, wasn’t it? I think your words above were suggesting that Simon do NOT put funds direct into the Offset – but I am not sure if that was in answer to his original problem, or as a “by the way” comment re Tax Deductibility.

The linked post below relates to “Mixing of Loans” and how we must be careful just HOW we access the equity (from which loan – and/or from which Offset??)

https://www.propertyinvesting.com/topic/4997918-redraw-from-an-offset/#post-5029521

But wasn’t there something else re “Not taking funds straight out of an Offset account for Deposit/Costs” – could you clarify that for Simon please? Especially in relation to his current moves. i.e. Should he pay back that new Loan and only draw on it once it is time to settle on the new IP? Should he NOT use the Offset right now, except if he has his own spare funds?

Benny

Hi Simon,

Am I correct in guessing you are suggesting I would run into further trouble if I put the IO funds in the offset against my PPOR?

That is a good thought, and that might be quite right – but really, it was an earlier comment from Terryw that I wanted him to clarify (and this goes back some time too – but could also be related to your situation). The words I thought I recalled went something like “Don’t pull the money out of the Offset when you want to use it – instead, use that cash to pay down a Loan, then borrow directly as a separate Loan, not from the Offset”.

Now, it appears you HAVE DONE something like that by creating a separate loan. The only difference is that you drawn down that loan already, and the settlement is still a month away. Terry’s words MIGHT have indicated that you should pay back the money INTO the Loan and NOT draw it down just yet…..

…..OR, I might have mis-interpreted him completely. I don’t know.

Sorry for adding doubt, Simon – but I wanted you to be sure before things went pear-shaped (and I could do with knowing more about it too – and that is where Terry comes in),

Regards,
Benny