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Hi, Ryan,
In both scenarios you should isolate the debt now so you can claim on it in the future. To do that you could do as follows. (Assuming the loan balance has never been lower than $300K?)
Loan 1: $300K interest only loan – with linked 100% offset account
Loan 2: $180K line of credit (with $0 drawn) – you could do this later if you wanted also.Total loans $480,000 = 80% of value (that way no mortgage insurance)
You then have your pay etc paid into offset account and pay just the minimum repayment on the loan. This leaves your options open.
If you end up buying a PPR you use whatever is in the offset account as your deposit first and the line of credit second. Then borrow the balance required for the new PPR solely against the new property i.e. stand alone deals / securities. That way you can then claim the full interest on the invetsment loan of $300,000 and will have stand alone securities.
If you end up renting the line of credit just sits there no costing you anything and you build up the offset account without making principle reductions to the current loan meaning when you do evenetually buy something else you can do as above.
Maybe a family trust structure on the new purchase or set up the business as a company with both of you as shareholders but just 1 of you as director, then put the title in the name of the non director.
Cheers,
Marty McDonald | Mortgage Experts
http://mortgageexpertsonline.com.au/
Phone MeAs mentioned by Richard and Jamie. The way they are viewing it now is they want to be sure you can service current and future debts. So when you go and use the LOC for the deposit and costs on your next purchase and then take out another loan for the balance to complete they need to be comfortable that you can service the entire debt even if not all with them.
If you can't service the entire debt their loans are at risk of default too. Under the rules they also shouldnt have given you the LOC increase in the first place if they knew that you were going to overextend yourself in the future. Tough I know but thats the thinking.
One way around it would be to submit an AIP for the investment property (possibly lower than you actually end up buying for) at the same time as the LOC increase. Then use another bank for the invetsment property loan. Problem here is they may still ask for a contract before increasing your LOC and t adds another credit file enquiry to your file.
Marty McDonald
http://www.mortgageexpertsonline.com.auMarty McDonald | Mortgage Experts
http://mortgageexpertsonline.com.au/
Phone MeMay be try La Trobe.
Might not be much better rate than what you quoted though (or maybe its them?).
Marty McDonald | Mortgage Experts
http://mortgageexpertsonline.com.au/
Phone MeHi,
If the borrowoer is a compaNy it falls outside of the NCCP regulations. This was specifically included as part of the legislation IMO to allow property developers to be able to borrow money… as almost all smaller developers would not be able to service their peak debt out of their taxable incomes.
So as far as I am concerened if a client is a company the responsible lending laws do not apply…that said I would have no part in accepting a falsly infalted income declaration on a low doc basis.
Marty McDonald | Mortgage Experts
http://mortgageexpertsonline.com.au/
Phone Me
