Forum Replies Created
Hi Glenn,
Talk to your accountant about paying interest in advance, if you have the means you can pay up you a years interest in advance so that you could make that interest deductible whilst still working.
TLP
I asked that question of the bank, its not an option, when you take out the loan it is disburst into an account, it cannot be disburst back into the loan, so the branch manager told me. Let me know if they are wrong but we had a very specific discussion on this matter.
cheers
TLPHi Terry,
Please confirm if I have interpreted correctly:
1. Take out loan (split)
2. Funds are disburst into an account (savings)
3. Pay funds back into the loan
4. Use redraw when I need the fundsNow I thought redraw would be subject to similar treatment?
Regards,
TLPJamie M wrote:Or just set it-up as a second IO split on the variable product. If it's set-up as a second facility you'll be able to easliy identify the deductable debt from the non-deductable.Hi, currently going through the same process as well and for the lower interest rate I am leaning to this option over a LOC. Question though, where does the money sit while I am searching for my property (funds not used), if in a plain savings account then I am paying interest on the loan without actually using the funds yet, my thoughts to overcome this is to set up an offset account for this split and so not paying interest until the time comes that I need to use the funds for deposit. Some have suggested this may still have some problems with compliance from ATO, any further thoughts on this?
TLP
Terryw wrote:Do you understand, from a tax POV, you can't simply redraw the $50k and make your loan $100,000 with the $50k in the offsetThat would be assuming they are refering to IP…. If the redraw is from PPOR then no tax implications I would say.
TLP
Hi,
Won't claim to be a successful investor (yet) but here are some options I might consider if in your position:
1. refinance PPOR loan to 224k (maintaining 80% LVR and hence not subject to LMI) and pay down 9k into your personal loan. You would need to crunch some numbers to work out if this is worthwhile and also consider if additional repayments in your personal loan are subject to penalties.
2. refinance PPOR loan to 224k (maintaining 80% LVR and hence not subject to LMI) and use 9k for investment purpose, won't get you much in property space, perhaps shares but it would only stack up if your shares perform better than the interest savings opportunity in case 1
3. Refinance PPOR loan to 252k but you would be subect to LMI as LVR @ 90%, this would give you access to 37k equity which could be used a deposit for your next IP, pending your capacity to service an additional loan.
Regards,
TLPHi Marty,
Thanks for that, spot on and my fears as well.
Regards,
TLPHi,
Not seeking any tricks, more a question of which order in arranging finance, i.e.
1. Purchase price – 500k
2. Deposit – 100k
3. Borrow 400k
next:
Need 100k for renovation:1. Will a bank lend me 80k as long as I have 20k for renovation under construction finance? reason why I ask this objectively is that without seeing the finished product how would they know it would be valued at 600k after renovation?
2. fork out my own 100k for renovation, then refinance once completed in the hope that they would lend me an additional 80k on the basis of value add that I have put in, obviously this is not ideal as I would somehow need to come up with 200k upfront initially.
Thanks
TLPHi Terry,
My Mortgage broker is a CPA, even so this is why im geting further opinions. Main point is that there are 2 offset accounts (1 for each splict loan) 1 offset account is salaries/daily transactions, the other offset account is only linked to 166k so I wouldn't imagine any contamination?
330k – linked to offset 1 (transactional and no interest deductions claimed)
166k – linked to offset 2 (interest deductions claimed)TLP
Hi Terry,
Can you clarify please, let me explain my scenario:
Current PPOR:
Property Value: 620
Current loan: 330
100% offset account linked to this mortgage with wages and savings held in accountProposal:
Property Value: 620
Refinanced (split 1): 330 (interest is non tax deductible)
100% offset account linked to this (split 1) with wages and savings held in account
Refinanced (split 2): 166 (interest is tax deductible as for investment purpose – deposit for new IP)
100% offset account linked to this (split 2) 166 sits in this account until required for deposit, until that time I pay no interest on this 166 loanThis is the advice ive received from 2 brokers which essentially produces the same outcome of a LOC, if anyone has info contrary to this then I would appreciate your feedback.
Thanks,
TaiHi,
Just worndering if anyone knows if the axing of deffered establishment fees applies to existing loans? I have sold a property which will settle in 5 weeks from now and want to know if this would apply to existing loans.
Cheers
TLPThanks Ruk,
No problems with contamination as purpose of loans would be for investment. Does anyone have any comment on borrowing capacity? Would an undrawn LOC allow for maximised borrowing? (vs drawn loan sitting in offset)Thanks,
tlp
