Hi Hulkster

Ideally you dont want to cross collaralise the 2 securities so need to be careful on how you structure the 2 loans.

Probably easiest way to go is to look at an investment line of credit secured against your PPOR to cover 20% of the land & building costs and then through a separate lender look to take out standalone interest only investment loan.

Your mortgage broker should be able to give you some suggestions for suitable lenders once they have some further hard data.

Weswas

There are a couple of factors and steps to consider.

Firstly buying as a first time buyer and I assume wishing to claim the First Home Owners Grant you will have little alternative but to buy the property in your sole name as using a Trust or other entity will disqualify you from claiming the FHOG on this property.

Secondly there is not point in trying to pay down the principal significantly when you intend to eventually turn the property into an IP as the interest charged on the funds resulting from any redraw would not be tax deductible unless they are for investment purposes.

I would therefore look to take out an interest only loan with 100% offset account and put all of my savings into the offset account to maximise the tax effectiveness when you rent the property out but also reduce the interest charged in the meantime.

Now the question as to what lvr you look at will depend on whether you wish to pay mortgage insurance and preserve your capital or not.

A good independant mortgage broker should be able to give you some options as many lenders will not like the fact on a high lvr that you wish to take out an interest only loan on your PPOR.

Hi Sheran

I answered your question on the other forum but in essence this is what i posted.

I would be wary if the agent selling the property wants to organise your finance as he acting for the vendor certainly will have any interest in the matter and it wont be yours.

Just because you are only part time is not really issue with certain lenders given the LVR however it is how it is structured that is probably more important.

I would be seeking advice of a mortgage broker who is going to work for you and not for the vendor.

Hi Ruffa

I hate to say the usually reason why a broker suggest this is because they dont understand how to properly structure an investment loan.

You certainly wouldnt in your position corss collateralise the 2 securities unless you wish to invite trouble down the track.

The way you would structure the loan is to take a investment line of credit secured against your PPOR and use this to fund the 20% deposit and acqusition costs.

The separately you would take out a standalone 80% interest only loan secured against the the IP only.

Once the IP increased in value you would raise the loan to 80% of the new valuation and look to pay down the LOC.

Eventually the total loan would be secured against the IP and nothing against your PPOR.

This will save you anquish in the future and protect your principal place of residence.

Brokers who suggest otherwise really make me wonder whether they have any investment lending experience.

George

2 out of 2 great opening contributions.

A Pty Ltd Company pays Tax at the Corporate Rate which is 30 cents in the dollar.

If the property is purchased solely in the Company name then you will loose the CGT concessionary rate.

Alternative would be to have the Company as a Corporate Trustee for a DFT or similar.

Hi Nick

If you are unable to evidence your income then it sounds to me like the pre-approval you had was done on a lodoc basis.

Not sure with whom the pre-approval was with but lodoc lending terms and conditions change fairly regularly at the moment.

Assuming you decide to purchase a property prior to departure and that you are able to distribute the retained earnings to you individually over a period of time you might wish to look at establishing a 100% offset account so that the interest earned on the savings offsets the interest being charged whilst at the same time remains oncall and accessible.

Remember in Qld that the date the contract is executed you as the buyer are responsible for  the Buildings Insurance.

Given that most insurers will run a mile when you mention Student accomadation you might want to line up you Insurance Cover in readiness for the offer being accepted.

Unfortunately their is insufficient data to enable any structured advice to be provided however i dont think it is as simple as all that.

One thing i would be careful about using your redraw facility for a investment property deposit.

You would be better off to clearly separate the two loans and structure the facility so that they help in reducing the PPOR debt.
 
Are the loans cross collateralised ?