Sorry to be ignorant Terryw but I still don't understand. If I borrow from loan 2 now when it is still our current home and loan 2 also has all the costs for IP1 coming out of it (which would be eligable for tax deduction now), won't that be mixing things between IP1 and future IP2 (now PPOR)? Is this something accountants can easily deal with?

I was just thinking if we kept Loan 2 for IP1 expenses and Loan 3 for current property expenses. So it would be like having two IP's already except that we couldn't claim for anything for loan 2 till our ppor became an IP but as you said it would build up debt on that property for negative gearing. If I am wrong in my understanding forgive me? We still have scope on Breakfree for one more loan if we need it in the future.

A few more queries, that have come to mind.

If we keep loan 3 paying out all costs and interest for ppor and we wanted to do some renovations on it, would it muck things up for us if we took money from Loan3 or is it best to take the money from redraw and then pay it back? I understand any costs incured could be used to increase our base amt when calculating CGT?

Just in general if we were to take money from the redraw for any use eg personal, would it cause any problems as long as we paid it back to the same amt before we turned it into IP. This is also an issue for us because in order to consolidate out split loans and retain redraw, we were advised by bank to redraw all funds and place in offset. So should we put the redraw back to previous levels?

We have had a building report and it shows the IP1 needs some minor maitenance eg clean gutters, cracked roof tiles, loose bathroom tiles etc. We would like to fix these as soon as we settle. I understand the property has to be avilable for rent, if we want to later claim deductions on this costs. Is a post on a free internet site sufficient? How do we prove it is available for rent?

I understand for later calculation of CGT you need to confirm the value of the property on purchase. I assume the price you bought it for does that. Do you need to do another official valuation of any sort? When should you do a valuation on an IP or is it needed just for finance reasons?

Thanks again for all replies. I will start a new post in future – Cheers.

PS They did give us a 0.6% discount for LOC loans.

Cheers Terryw.

Did PM CJC but no reply.

Just a follow up for other forum users regarding NAB v's ANZ multiloan products. We spoke at length to NAB. We were advised that the 6.44% was only an intro rate and that loan also required a $10/mth fee. Best they could do otherwise, was 6.64% only marginally better than the 6.71% ANZ is offering us (after discount). So that coupled with the difference in the annual rate ie you pay $20pa less with ANZ and the complexity with moving all our finances, it really isn't worth our while. We also explored the idea of splitting the loans across the two banks but this would also work out more expensive and complex.

I must say that in the 8 years we have been in ANZ, we have never had a problem and always great customer service. That is another factor in our decision. We walked into the NAB last week and they just turned us away. All the help we have recieved from them has been over the phone and they themselves admit that it is difficult to get to see anyone face to face in WA.

Hope that helps.
Newdawn

Thanks again Terryw;

So put simply. Am I on the right track below.

Loan 1: IO with redraw and offset for current PPOR. Put all wages and spare cash in offset now to reduce interest and so can use in future for next PPOR, when current PPOR becomes future IP.

Loan 2: LOC secured on PPOR. Part of equity from PPOR. Use for deposit to buy IP1 plus all other interest payments and costs. Hopefully can tax deduct interest. (Check with tax advisor).

Loan 3: LOC secured on PPOR. Part of equity from PPOR. Use for deposit for future PPOR or to renovate IP1 to become future PPOR or for deposit and costs for next IP.

Loan 4: IO with offset. Stand alone loan for IP1 currently being settled.

If this is correct, it should cover all our future possibilities.
Thanks once again to all. You have been a great help.

Have sent you a PM, CJC. It sounds good, but we are short on time as need to have approval next week.

Thanks Terryw;

I appreciate your experience and advise.
Just a few questions.

Loan C: Why LOC as opposed to IO with offset? I am under the impression that LOC has higher interest rate and the same flexibility can be achieved with IO with offset.

Why do you suggest two LOC loans? Is it to keep separate expenses/ deposit / etc for IP1 – interest tax deductible and second LOC money for other Investment eg next IP? I was thinking three loans would be enough.

Loan A: I agree consolidate existing split loan to IO with offset.
Loan B: I agree set up new IO for IP1 which is stand alone using deposit from PPOR equity ie Loan C.

Also as I have said above. ANZ said they are happy to structure it this way. Do you think it is a problem keeping this all with the same bank?

Yes Richard – five loans with Breakfree.

Would love to hear comments from anyone else on the forum, as always willing to learn more.