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My friend told me if I refinance my existing place and cash out for the deposit of new place, the difference of increased loan amount is not tax deductable.
i.e. If the existing loan is 200K, after refinance and turn it into IP with 300K loan. The interest of 100K loan is not tax deductable. I can only claim the interest from 200K in the end of FY.
Is it true??
My original plan is to refinance and borrow as much as I can from the IP loan and top up to my new living place. Then I can pay off my new place faster and the investment loan will be handled separately and the interest from IP loan is for tax purpose
Do I misunderstand something?
Thanks,
EricThanks for the advices.
I must go for other lender for Refinacne with Cash out option because I'm using Onedirect won't accept any variations to existing loan.
The reason for refinance is to ensure to have enough cash for new own-occupied property.
It sounds wiser to have two separate loans. One is refinance of the existing loan and the other for new property. Right?
I'll check with the lender again.
[/quote] If you went to your local bank and asked this same question; what they would tell you is to bring this loan over to them and then they will allow you to take up your 2nd loan using your first home as security – X-cross. A big NO NO! How would you go about this problem?
[/quote]Hi Michael,
I have a similar situation and have to change to new lender in order to refinance for the existing loan. The bank said what you mentioned. It seems OK because I can utilize my existing property to fund the new own-occupied and also avoid paying mortgage insurance. What is the trick / problem?THanks,
Eric
