All Topics / Finance / Portability – a smart option?

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  • Profile photo of shangrila00shangrila00
    Member
    @shangrila00
    Join Date: 2009
    Post Count: 65

    Hi All,

    Could anyone more finance/investment savvy than me please advise if this is a possible scenario – both from a bank and finance's perspective?

    Say I have a property worth $500K and a low-doc loan for that property (LVR at 60%) for $300K. That property's my PPOR, and in order to free it from debt, I decide to purchase an IP that is worth exactly what my PPOR is worth, and port it onto my loan? That way the loan is still supported by a property worth $500K, the loan amount remains at what it is, at $300K, the bank has its own security against that debt (whether it's a PPOR or an IP is for me to stress over), and my CT is safely tucked away in my cupboard, collecting dust? The only change to that loan is the fact that it will be supported by an IP instead of what is my PPOR.

    I've heard it said numerous times that the first property is always the hardest to buy, but once there's sufficient equity in it, the smart property investor can go out and buy more on the basis of that equity. I'm thinking that the above-mentioned situation reflects that, but would be glad to hear more from anyone out there who is more aware of how it all works.

    Thanks!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes you could do that. It is just substituting the security of the loan.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of shangrila00shangrila00
    Member
    @shangrila00
    Join Date: 2009
    Post Count: 65

    Thanks Terryw! Very much appreciated.

Viewing 3 posts - 1 through 3 (of 3 total)

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