total loan amount is ($583K) and current valuation (830K), LVR 70%…Not sure if i got the calculation right…..

Below is the balance

PPOR = 230K Outstanding = Valuation $410K  –> 100K+ linked to offset
Resi Loan 1 (equity from PPOR) = 90K
Resi Loan 2 = 263K = Valuation 330K

Thanks

Hi ,

I am not expert at this, but can advise that I was in same boat. I've done

1) this point. I agree with TerryW that to make sure offset account linked to this IO has no other funds apart from the excess fund which will be used at settlement. I, still have this offset account open with some excess funds, which I am planning to put in redraw…[Read more]

Hi Duckster,

thanks for your response. It wasn't my intention to get financial advise via this forum, but i can see how it could have sounded like I was seeking financial advise, my apologies for that.

Also, thanks for the links provided, hopefully that will guide me to understand what sort of insurance policies are out there.

thanks again,…[Read more]

Thanks Jamie.

Hi Jamie/PLC,

I am not 100% percent sure but will check with my broker if this loan has redraw facility or not. I’ve feeling that this was discussed with my broker during loan setup and I was somehow convinced not to go that path….anyway I’ll check that again.

Please correct me if I am wrong the way redraw work is like this e.g. Loan of 60K…[Read more]

Terryw wrote:
Sounds like you have borrowed money to invest in a non interest bearing savings account. Dangerous

Hi Terry,

Thanks for your reply. I am not sure about what you meant.

My intentions to borrow this money is only or investment, but after the settlement I found that bank has lend me more money so rather than mixing this money…[Read more]

Thanks Jamie for your reply.

– currently there is no plan to convert PPOR to IP, in any case converting it to IO would be good idea if I suffer with serviceability

-i agree offset is not the best place to park the equity release…..Loan in question is IO only so can't put that into redraw until it becomes the P&I.

Just need to get your comment…[Read more]

Terryw wrote:

s0805 wrote:

Hi Terry,

I had identical situation and had just settled on my first IP. I need your opinion to understand if I've done this right or not. Bank allowed me to borrow $90K as equity of my PPOR as separate loan, when I was settling on $90K loan I advised bank to open new offset account and link it to $90K and put all…[Read more]

Terryw wrote:

jmsrachel wrote:

kat13 wrote:
We pulled out the equity on our house – 90K which got paid into cash into our offset account until we were ready to get something…but we are also using 30K for personal improvements which is maybe why it was done that way????

We are currently waiting on preapproval for the rest (not sure how…[Read more]

luke86 wrote:
This is complicated- I would get actual advice from a suitably qualified and experienced accountant rather than from a forum. Relying on something that someone told you in a forum is not the best idea.Cheers,Luke

Hi Luke/Terry,Agree with you guys that using LOC would uncomplicate things in this scenario. And totally agree with…[Read more]

Rob G. wrote:
Interest expense would form part of the cost base of a CGT asset, however the cost base is reduced to the extent that the expense is deductible.Costs of searching for a property do not form part of the cost base of a CGT asset. They are also a capital expense and therefore are not deductible.The cost of agent fees are specifically…[Read more]

First  of all, thanks all for your feeback and time for my question.

Jamie M wrote:
Hi S0805If the lender allows, set-up an offset against that $95k interest only loan. When the funds settle – move them into that offset. That way, you're not paying any interest on the funds until you use them. CheersJamie

This is an excellent idea, thanks for…[Read more]

Pjevans wrote:
As i'm sure you're aware, to claim interest as a tax deduction, the funds must be used for or towards income producing pruposes, be it capital or revenue in nature. Therefore, in your above senario, until the funds are used as such, you will not be able to claim a tax deduction…I presume from the information you provided, you…[Read more]

Hi Luke,Thanks for your reply. I am not against the LOC, it was just that I was recently briefed by expierenced property investor to follow this stratergy and not to go for LOC ( may be to avoild paying more interest for the life of loan). I also recently read somewhere that demand for LOC is down for the investment purposes as well.Anyways if the…[Read more]

Thanks guys for your feedback and suggestions.

Hi Dean,

agree with Richard on this, your scenario can work. but that would cause cross collateralisation of securities.

Richard can you please look at my update on ‘October 18, 2010 – 3:30pm’ and advise what strategies should i use or how should i handle my cash flow?

thanks in advance
Saurin

Hello there,very interesting, I have almost the same scenario as AM2778, the difference being I haven't bough my investment property yet. Very impressed with the way loan has been structured and gr8 input from Terryw.With the same situaltion I'll try adding numbers to find out if I could have same options available or not. apologies in advance…[Read more]

Hi Guys,thanks for your input so far. Cross collateral means using 2 properties to secure one loan.I think as I am starting out in property investment and using equity from PPOR, i guess regardless the way I arrange, my PPOR will be used as secuity. I think this technique becomes handy when i'll buy my second IP, i will be using equity of my 1st…[Read more]

hi thanks for that. as per this scenario I have avoided CC but what are you suggesting is bank if require can have access to my PPOR (as security) if i default on my LOC. so can I ask what is cross collareral is then. as for this scenario i definatley haven't kept the banks hands off my PPOR even avoiding cross collateral. thanksSaurin

thanks a lot for your input guys.Correct me if I am wrong here. the interest occured on Loan B would be deductible, cause it has been borrowed with intention of covering capital costs for my IP. Please note I am talking about the interest here not the actual amount. Actual amount like stamp duty and stuff will only come in play when I decide to…[Read more]