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Hi Zizzuu,
My wife and I are currently in a similar situation so the following may help:
We are just going through the process of purchasing our first IP at the moment with our home prob worth upto 400k (but hasn't been revalued yet). We have an IO loan but as a line of credit (portfolio with St.George) with a current balance around 225k. I wouldn't extend your loan past the 80% mark or as BrisBroker said you'll be up for mortgage insurance which essentially is for the lender's benefit although it does allow you to borrow more – and I have also recently found out some lenders have a higher level at 85-90% without requiring the insurance. As above also, the amount you use from your current loan to fund your new IP should also be tax deductable.We considered 2 options – stay with St.george with the variable rate we are on and the unit we are buying would become a sub-account OR use the available balance for deposit and costs and establish a new loan. I'm sure there's a stack of other alternatives too!
Our other concern was whether to fix all or part of the loan(s). We are now waiting for offers from Suncorp and Bankwest to see who will offer us the best/most suitable deal. I could probably start my own thread to ask people about our situation too
but back to you…I think the common approach is to keep all investment loans (at least) as IO and maxed out to put as much back into your non-deductible loan as you mentioned. Fixing I guess always comes down to how comfortable you are in repayment certainty.
As for us – although our exit fees will be high seeing as our loan is only 2yo – with more interest rate rises predicted and a better offer on the table: we'll most likely refinance and fix the total investment portion of 280k + 80% of our remaining loan for our PPOR.
That's all for now! More than happy to clarify anything here
Cheers
but back to you…
