Overseas rental income is taken into account here.

A ‘joint venture’ with someone else that does have serviceability may be another option. This could be a temporary measure until you can service or a long term thing.

Self employed operating trusts and companies.

And I should point out the best solution and that is a term loan which allows payment directly from the loan account. Westpac Roket loans for example.

I didn’t say either was a bad idea. There are only 2 products you could choose from – the LOC or the term loan.

One strategy may be to use a LOC and then immediately convert it to a term loan after settlement.

What I am trying to say is by taking the borrowed funds on a detour you a muddying the waters of interest deductibility. It is not clear if the interest on the $80k loan would be deductible. However to improve your chances I would suggest just before using that $80k you should pay it back into the loan and then reborrow it.

Consider the tax issues.

Interest is deductible if you borrow to invest.

With the offset account strategy you are borrowing to place money in a savings account. At some later date you may invest the money. Can you save you have borrowed to invest?

You may say you can trace the borrowings to the loan. But what happens if you put cash into the offset with borrowed money?

LOC on other hand are higher rates and are usually at call loans so not ideal.

Solution. Get tax advice from a lawyer or a tax agent.

I must admit to being the best but I am so good that I charge an upfront fee of $660.

Yes – provided you meet relevant laws

First thing to do is to tap into that equity by borrowing against your house under a separate loan. Then at the same time work out borrowing capacity.

Once you know what you can afford then try to narrow down areas and then buy. You could use a buyers agent for this step.