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Hi again everyone
Thanks to all of you who have replied so far. I spoke to Darryl from RPI this morning and he has suggested some very clever ways to overcome this problem. It is not going to be such a big problem after all. Thanks for your time and advice Darryl!
Dave
Hey Guys
Thanks for all the responses, I think I understand a bit better now. I need a completely separate account from my current loan and offset? Richard – my main reason for using a 20% deposit was to avoid LMI as I thought this is what I should be trying to achieve. However your suggestion to use 89.9 % LVR to minimise exposure on my PPOR does make allot of sense. I guess it would also increase the amount of deductible interest as interest on my PPOR is not deductible but it is on an IP? TheFinanceShop – I ideally would like to buy this property, then another in the next six months. I would like to at least neutrally if not positively gear them to try and avoid using any of my savings to hold these properties. Then as they increase in value use the new equity to buy more properties.
Thanks again
David
Hey Guys
Have just done a quick search and came across this thread and as I am just about to use some of my equity in my PPOR to buy an IP I thought I'd better ask to make sure I get it right first time. Here's a little information about my situation – I owe 340k on my PPOR which is worth about 520k. This mortgage has a 100% offset account and a redraw facility too. I am looking to spend about 310k on the IP and I would like to put 20% deposit down to avoid LMI so I need to borrow about 62k plus expenses. I have found a couple of properties I am looking at putting offers on. After reading this thread I now know not to put the new funds in the offset so my question is should I borrow the 62k plus expenses and "park" it in my existing loan on top of the 340k and then use the redraw facility to get access to it when I need it or is there somewhere else the 62k plus expenses should be "parked".
Thanks
David