It is actually less than that "I have heard the average life of a home loan is 7 Years".

Hi JR

Hate to say i told you so but well i did.

As a Licensed Financial Adviser myself i find it so hard to believe that there are so many advisers out there that are only in it for what they can get of the deal and not really interested in helping the client.

To be honest finding a FA who recommends property is like winning the Lotto because of the way in which the remuneration system in general operates.

Now with regards to how to finance the deal you have to also understand that it is not in your Banks interest to tell you how to structure the deal to your advantage when they can offer the advice to their benefit. Of course that is assuming the manager or the young girl you talk to has any idea in regards to loan structuring and tax mimimisation strategies.

Most Bank staff have no idea whatsover and will never tell you you can do better by going down the road to an alternative lender.

You ideally want to limit the exposure of your own home to as little as possible and that will give the wife for comfort.

An independant mortgage broker will be able to give you a variety of suggestions to enable you to move forward.

In essense the saving is identical but from a Tax perspective they are a miles apart

Yes IZ i have had a few clients go them and then show me their Accounts for something we do at less than half the price.

Hi Triggerman

Yep not sure about Terry but I didnt have a grey hair when i first joined  the forum and wouldnt give it up for the world.

Great place to interact with other like minded investors and share a common passion.

Ok enough of that onto your questions:

Questions are:

1. If I pay off the break fee of 6k after turning our PPOR into an IP, will that be a tax deductible expense. 
The debt would increase by $6K and therefore yes the additional interest would be deductible once the property was available for rent.
2. Are we better off switching to another lender that will offer a much competitive rate? We've been here for two years only and I'm thinking that I might pay another LMI with a new lender.
Thats a hard to answer and would depend on how quickly you would recoup the break fee. Base interest rates are around 5.25% (give or take) so depending on the size of the loan your savings could mount up pretty quickly.
3. Is it possible for me to rent out, convert our PPOR to IP, refinance for investment (ie. IP or shares)
If the loan is not already an interest only loan then when you refinance I would look to convert it to interest only with 100% offset account and sit a line of credit in behind the initial loan to allow you access to capital for your share or other investment.

Structuring the loan is important to ensure you maximise your deductions but as i mentioned without all of the figures it is difficult to advise you further.

Hi Bundy

As I am a director, is this not allowed.

If the property is held in your SMSF then simple answer is NO i am afraid.

Hi aitsmoi

Firstly welcome to the forum and I hope you enjoy your time with us.

Congratulations on making the decision to start your venture into property.

Should I go through a mortgage broker or should I directly deal with the bank/ loan providers? What are the pros and cons?

Ok firstly i must declare an interest here being a Broker. One of the advantages of deal with a Broker is that he/she can assess your overall position and requirements not only now but also into the future and make recommendation on a product / lender with all of the facts. No lender is going to ever tell you that you do better down the road.
There are no costs in dealing with a Broker as they are remunerated by the lender with who the business is placed.
In many cases a Broker can negotiate a deal thru where the client could not and especially in the current climate this can be very important.
Personally i find my clients utilise my services because they now that i can value add to their application and It is not merely a matter of looking at who offers the cheapest interest rate.

When inspecting a property, what are the things to keep in mind? What information should I get from the real estate about the property?
Tou have mentioned that you are looking at Units so i would make sure all details on the Body Corporate are fully available to you prior to inspecting. This would included the Annual contributions, current Sinking Fund balance and what is the intended expenditure on the property over the next few years.

What if the property walls have cracks on them? Does that get fixed prior to purchasing? Will that help me negotiate the cost, etc?
This will depend on whether the cracks are internal to the unit or externally.
Externally they will be the responsibility of the Body Corporate however internally you can certainly negotiate the price if these are present. Make sure they are not merely gyprock cracks which can form over time as the seller is unlikely to want to discount the price for this.

How do I get information about the neighbours of the property?
Other than talk to other tenants / owners in the block it is difficult. Might want to pop back on say a Friday / Saturday night and see how they behave. 

How do I find out the average property value in a particular suburb?
Services like Residex or RP Data give you an indication.

Hi Rabbit

Moving funds out of the redraw will not mean the interest will become tax deductible unfortunately.

As soon as the unit is available for rent you should get it valued and this will become the cost base figure.

Hi Rabbit

Good to have you with us.

Ok my friend i think you have caused yourself a problem.

1. how can i structure my loan bal so i owe most on the IP….  is it possible i can move the amt paid on my current PPR to the new property (the amt -40K i reduced the loan amt back in feb)… so i can owe maximum on the unit (current PPR) when i rent it out… and owe less of the new property..  Bit to late to do this now however depending on the numbers you would look to transfer the property into a Unit Trust structure with you as the sole Trustee.  Stamp Duty would be payable but might be worth doing the exercise on paper.

2. Also i have 10k available in the redraw of the current property, i would like to move the funds as a redraw to the new loan… once the current unit is rented out, am i able to claim tax deduction on the interest paid on the 10k..  Unofrtunately does work like that. The funds from the redraw will not be Tax deductible as the purpose of the money is to fund your future PPOR.
 
3. how i can change the PPR from the existing to the new property..  Think i have covered that one.

My suggestion is to run your figures through a Mortgage Broker who has some knowledge of investment. Couple of things potential you could do but again had the properties not be cross collateralised would have been a lot easier.

Hi Nigel

There is no issue in wrapping the property to her daughter.

Under the Related Parties section of the SIS Act you are unable to rent the property from yourself however as long as Suehe daughter is not a Trustee she will be fine.

$3000 sounds like a lot of money to establish a SMSF. We normally charge $999 but i guess it pays to shop around.

Not convinced it is necessary given the rest of the information provided.