Hi,
I have a question I'm hoping someone could help me with before going to my accountant. I have recently setup a LoC loan against my PPOR in the hope to find a second IP soon (also go for pre-approval which hasn't come through yet). However, I was wondering if it would be a bonus to pre-pay interest in advance on my existing IP this financial year. My thought for doing this was to obtain tax benfits this finacial year as we have not yet found a second IP. In the new financial year our incomes are likely to drop a bit so I thought this might be a useful exercise. Any thoughts? Thanks in advance.You don’t have long to find a property if you want to prepay Interest this financial year.
Approx 7 days to go if you buy with a 30 day settlement…
Hi Banker, yes, you are correct but I did mean that I wanted to pre-pay interest on our existing IP (not our new one). Thanks
Same old story as Banker said not much time left.
You have to get your current lender to redo the loan and accompanying documentation to reflect a 1 Year interest in advance loan.
It is not a matter of just drawing down from your LOC and paying 12 months upfront on a standard loan.
Richard Taylor | Australia's leading private lender
Hi richard,
Thanks for your comment. I did speak to the bank and they were able to confirm my loan is structured to allow for prep-paid interest only for 12 months…..but I think based on your comments….. I may need to go into the bank to confirm as maybe they have got it wrong. Thanks for your time.
I missed the part in the first post saying that it was for an existing property.
Rather than getting a new loan they should be able to complete a variation (switch) from your current loan to a fixed loan (assuming current loan is variable). This should only take a few days. As Richard said; you cant just pay 12 months worth of payments into the loan; it has to actually be charged as interest…
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