Ok, i was with Rams and got changed to RHG. I just got letters in the mail saying they had cut to 8.25% approx, i was paying 9% when i posted this…. So perhaps disregard that —> I am seriously thinking of finding a cheaper loan interest rate elsewhere. <— (I have 2 loans, joined with them, one interest only of $105,000 and the other P&I owing about $120,000)
I have about 12k available for redraw, i want to use some of this, but am wondering if i should redraw from them, or just go entirely chasing a new loan and cop the couple of thousand in exit/entry fees and perhaps have some equity unlocked? If that makes sense, or is even possible? But i'm guessing that the rate now is a bit more to the field of other lenders… The approx value of the properties i have loans on is about $350,000.
Any help or advice on that matter, or recommendations on better lenders would be appreciated guys, thanks.
This is a difficult question to answer without knowing all the facts and what you are trying to achieve in the long term.
Unfortunately the cost of raising capital for organisations such as RHG is higher and therefore unlikely they will ever be that competitive in the near term.
Also the answer will vary depending on what you want the funds for i.e investment or personal.
All in all you should be able to currently get around 7.65-7.7% if the deal is right.
Richard Taylor | Australia's leading private lender
Richard,
In maybe 3 years time i am planning on moving from my PPOR which is the P&I Loan. And then i will rent out my PPOR, so i am led to believe that it is best not to pay this off, i will still have at least 70k owing by then anyways. (I will be buying a new PPOR) And the redraw won't be much, about 4k and it's for personal use (a vehicle) but i'll be able to cover that again fairly quickly. My minimum repayment on P&I is about 250/week, i pay 400/week.
What other kind of info would you like and does this sound like a semi decent plan?
Thanks again.
Hi again
No i would switch theP & I loan to an interest only loan with a 100% offset account and pay as much as you can into the offset account.
Once you buy the new PPOR and rent the place out switch the offset account to the new loan as the interest will not be Tax deductible.
Also if you redraw the available funds in the loan the interest will not be deductible and your accountant will have a nightmare trying to work out the proportion which is deductible and that which is not.
Not an idea situation so i think careful nuturing of the structuring is probably required. Get you Broker to outline the plan of attack for you and impliment it now rather than in 3 years time.
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Hi againNo i would switch theP & I loan to an interest only loan with a 100% offset account and pay as much as you can into the offset account.
Once you buy the new PPOR and rent the place out switch the offset account to the new loan as the interest will not be Tax deductible.
Also if you redraw the available funds in the loan the interest will not be deductible and your accountant will have a nightmare trying to work out the proportion which is deductible and that which is not.
Not an idea situation so i think careful nuturing of the structuring is probably required. Get you Broker to outline the plan of attack for you and impliment it now rather than in 3 years time.
Agreed and well put, Richard. It IS a nightmare when a formerly tax-deductible loan account is "tainted" by a non-tax-deductible purpose. Would also pose difficulties in explaining to the tax man if they want justification for the amount of interest claimed in future.
Eddie
[email protected]Thanks again,
So, i understand what you are saying, to set it up for my long term goals. My P&I loan is already a 100% offset, so i could just change that now to IO. RHG do 5 years IO. (I would be looking at probably $2500 in exit/ entry fees on a new loan/s) So in theory, doing that will lower my weekly repayments now, while keepin money in the 100% offset, i can access at any time, and will be better for tax purposes when i rent out my current PPOR in the future because i'll have more owing on the loan? Am i following right here? haha
Are there timelines or anything that the tax office looks at, from moving from PPOR to PPOR and renting out the prior? (Been in current for 3 and a bit years)
And when you say about the redrawing of funds, does this apply now that it will be hard to account for, or only when i can tax deduct interest when my current PPOR will be rented out. (in say 3 years) If you could explain to me a little more about how that would work… (as in "tainting" the tax deductible interest) Iit would be very rare i would have to use the redraw facility, as i still have a savings account with ING that i usually use for expenditures of the higher amount, (like reno's) I was just going to use redraw instead of applying for another small loan for a vehicle…
I hope i'm still on the right track here.
Thanks,
You may be interested in reading Tax Ruling TR 2000/2
Income tax: deductibility of interest on moneys drawn down under line of credit facilities and redraw facilitiesTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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