It seems that the forum is growing and getting popular. Nice to see Qlds007 and TerryW still here and active.
I have a fixed loan at 8.44% for 330k. We've been on our property for 20months now. Yes. Ouch. So if you're in the same situation, rejoice that your'e not alone.
I'm paying around $1150 per fortnight. If I switch to a variable rate, I will be paying $815/fortnight The fixed term is about to end on January 2010 and if I convert now to a variable rate, I would be paying roughly 6k. I'm also exploring the possibility of switching to another lender where the terms and rate are competitive and hope to refinance. As always our intention is to convert our PPOR to an IP asap. This time, we want to make all the correct steps and right loan structure.
Questions are:
1. If I pay off the break fee of 6k after turning our PPOR into an IP, will that be a tax deductible expense.
2. Are we better off switching to another lender that will offer a much competitive rate? We've been here for two years only and I'm thinking that I might pay another LMI with a new lender.
3. Is it possible for me to rent out, convert our PPOR to IP, refinance for investment (ie. IP or shares).Thanks
Hi Triggerman
Yep not sure about Terry but I didnt have a grey hair when i first joined the forum and wouldnt give it up for the world.
Great place to interact with other like minded investors and share a common passion.
Ok enough of that onto your questions:
Questions are:
1. If I pay off the break fee of 6k after turning our PPOR into an IP, will that be a tax deductible expense.
The debt would increase by $6K and therefore yes the additional interest would be deductible once the property was available for rent.
2. Are we better off switching to another lender that will offer a much competitive rate? We've been here for two years only and I'm thinking that I might pay another LMI with a new lender.
Thats a hard to answer and would depend on how quickly you would recoup the break fee. Base interest rates are around 5.25% (give or take) so depending on the size of the loan your savings could mount up pretty quickly.
3. Is it possible for me to rent out, convert our PPOR to IP, refinance for investment (ie. IP or shares)
If the loan is not already an interest only loan then when you refinance I would look to convert it to interest only with 100% offset account and sit a line of credit in behind the initial loan to allow you access to capital for your share or other investment.Structuring the loan is important to ensure you maximise your deductions but as i mentioned without all of the figures it is difficult to advise you further.
Richard Taylor | Australia's leading private lender
Thanks Qld007. Would you be able to send me PM on what figures or numbers you require?
I'm paying around $1150 per fortnight. If I switch to a variable rate, I will be paying $815/fortnight 
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