Hi Jason

Your loan repayments are based on the actual loan amount – not the value of the property.

In theory, if the bank believed your property was worth more less than the loan amount, then they'd want you to pay down some of the loan to bring the LVR within their required threshold. In reality, I don't know of it happening.

Cheers

Jamie

Hi Jason

Welcome aboard.

I'm not an accountant and would always recommend seeking professional assistance on such matters.

1 – Yep, should be fine. Offset accounts are treated different to "redrawing" money from the loan. Same applies if you have $50k in the offset (the amount doesn't matter).

2 – Most of my clients have an offset set up against their PPOR loan. It can be used for storing savings, personal expenses, etc.

3- Depends on your risk profile and goals. If you want to adopt an aggressive approach then using smaller deposits and higher LVR loans might be a good option. If you're risk adverse and not wanting to be overly aggressive in your approach – then a larger deposit and lower LVR would probably be more suitable.

Cheers

Jamie

Hi Dodo

The property should be in the same condition at settlement as it was when you signed the contract.

Just let the potential tenants know that the lawns will be tidied up prior to their lease commencing. Not sure if you can get the current owners to sort it out prior to settlement – and it's nice that they're allowing you to show people the property before settlement.

Cheers

Jamie

No worries.

You can either access that equity with BWA – just make sure it's set up as a separate loan, that's very important.

You could also refi to another lender if BWA are causing you headaches.

Given that you didn't pay LMI on this loan – an external refi shouldn't cost too much, but I'd probably have a crack at doing it with BWA firstly.

The IO for the first loan (the IP loan) is important because this loan is deductible – therefore, you want to avoid paying down any of the principle on this loan as you'll have a non-deductible PPOR  debt. If you were to pay any loan down first – it should be your PPOR loan.

This blog entry explains the concept.

Cheers

Jamie

Cheers

Jamie

Hiya Joel

You could keep things simple and simply access equity in your current property which will be used to cover the deposit/costs on your next property.

If your property was valued at $360k, you could take your current borrowings up to 90% of the properties value which will give you around $80k to play with.

This $80k would need to be set up as a separate loan so you don't contaminate your deductible IP debt with your non-deductible PPOR debt (the equity release).

Did you pay LMI on this loan previously? If so, I wouldn't rush to refinance as you'll be required to pay a new LMI premium with a new lender if you access equity above 80% of the properties value. If you've already paid LMI with your current lender, then the equity release above 80% would simply be a top-up on the existing premium which is a cheaper option.

However, $80k isn't going to buy you an $800k PPOR in VIC – you're going to need to chip in some of your own funds as well.

Cheers

Jamie

If the LOC has been used exclusively for IP purposes then I wouldn't bother splitting. It will involve a new application – so an unnecessary hit to your credit file.

Cheers

Jamie

Sounds to me like your self employed.

Cheers

Jamie

Geeze Edwin – you need to do something with your avatar. I almost had a seizure!

Cheers

Jamie

Yep, give them a buzz and tell them that you're refinancing – you just want to give them the opportunity to match first. Don't bother with going into a branch – they're not too interested in making sure you have the lowest rate.

Cheers

Jamie

Are you increasing your borrowings with them or just after a rate deduction?

If the latter, tell them that your broker is suggesting you refi to x lender at x interest rate but wanted to give them the opportunity to match before you jump ship. This won't result in a hit to your file.

Cheers

Jamie