Hi Everyone, I’ve been reading this forum for a while, and have found it very helpful and informative, and I have a question regarding finance.
After years or travelling and moving around, my wife and I bought our first home last year on a 95% LVR.
We have a pretty good combined income of approx $160k PA.
Our plan now is to save for an IP. After doing a budget taking into account rising interest rates, normal expenses and a “buffer” to include unforeseen expenses, I think we will have a surplus of around $40k PA for an investment property.
My plan at this stage is to put extra money into our home loan to reduce non-deductible debt, as I have read contributors such as qlds007 and terryw suggest.
The question I have is if I get ahead on my home loan by say $80k, and then wish to access that equity to purchase an IP, will I need to pay LMI again if the combined LVR of the 2 properties is greater than 80%, or will I be OK in the sense that I paid LMI for my PPOR already?
Thanks in advance.
Matt.
It depends.
If you just take money out of redraw then no LMI would be payble.
Terryw | 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
Gidday Terry,
I have cashback available on the loan, and was thinking this may be a good option, but by leaving the extra $80k on the PPOR I thought this would enable me to borrow 100% for the investment property against that equity, therefore maximising tax benefits?
I guess it all comes down to the numbers at the end of the day…
If you borrow 100% like that it will mean the properties are cross collateralised. This will cause problems later.
The best bet is to set up another sub account on your main property. Take the cash from there and then use as deposit for the next one. That way 105% of the loan for the new place is deductible and both properties are not crossed and stand alone – and you can go to different banks for them if you wish.
Terryw | 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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