G'Day Perseum,

Unfortunately no. The bank takes the less of either the valuation or the contract price which in this case is $650k. On the majority of times the valuation will come back the same as the contract price. If you are purchasing a property for $650k – you will require at least $60k by way of a deposit. 

Regards

Shahin

G'Day,

Welcome to the world of property investing! Yes the interest on the $300k or the loan balance at the time of the property becoming an IP is tax deductible. However you cannot increase the loan amount against the IP and claim the additional interest. Deductible interest is applicable for the purpose of the funds. Since you are using the funds to pay down your PPOR, this makes you eligible to claim the additional funds.

Regards

Shahin

Manly vale also had that stigma but its changed and the prices have risen dramatically. As you have noted there are a lot of units. I would be pushing for houses in Dee Why. There are some older houses on good blocks of land but they are quite rare so you need to be on the look out for a far period of time.

Another benefit of Dee Why is that it only takes about 35 min to get to the city via bus. 

Regards

Shahin

G'Day Liz,

A separate account would need to be established against the PPOR for $60,000 to use as a deposit for the IP purchase (sounds like you are wanting to avoid LMI which is fine). Therefore, you will have 2 separate loans. One for $30,000 and the other one for $60,000 both against your PPOR.

Now if you sell you PPOR then you will be repaying both loans and having a surplus that will be used as a deposit for the future PPOR purchase. 

Flexibility is required in such a scenario so a variable is better suited than a fixed loan. 

Regards

Shahin

G'Day Goatus,

How are you calculating the equity? 

Regards

Shahin

A cheaper house doesn't necessarily mean a bad property. Remember the dwelling depreciates over time and the land appreciates. I don't think its an issue that you have purchased a 'cheaper house' so as long as the area and land component is solid. 

Regards

Shahin

You need to get specific advise and this can only be provided after ascertaining further information. We would need to do a servicing calculation to see if your dad's wife can repay the loan before retirement age. This would mean taking into consideration the salary and rental income amongst many things. Also its a little concerning that they have no super. What is the reason for this and how will they support themselves whilst paying off the loan?

Regards

Shahin

HI VJ,

The big thing the bank looks at when it comes to applicants heading into retirement is an exist strategy (other then the usual checks such as servicing, etc). So the question for you is what is the exist strategy for you dad and his wife? Do they have adequate super? How do you propose that they pay the loan back? Also will this be used as an IP or a PPOR by your dad and his wife? If you are selling the property for $275,000 – how much deposit will they contribute to the sale?

Regards

Shahin

G'day Rick,

This has been the lenders' policies for a long time. Its too much risk for the bank to take on as a residential application. You can still submit the application but it would need to be a commercial application which means higher rates amongst many things.

Regards

Shahin

The lender with the cheapest rate right now is 5.81% if you LVR is below 75% which it is and the loan amount is above $200k which it is. They also have all the regular features like an offset facility etc.The difference to what you are currently paying is $400 per month. I would seriously consider talking to my current lender and getting them to price match or refinance your loan.

Also re extending the loan term – yes this can be done. The only condition is your age, i.e. you cannot extend the loan for another when you are 70 years old and have no exit strategy to show the bank. 

Regards

Shahin