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  • Profile photo of TjalnarTjalnar
    Member
    @tjalnar
    Join Date: 2010
    Post Count: 1
    September 20, 2010 - 9:57 am

    Hi,

    I need some advice on what I should do with the loans I currently have as I would like to invest in more property. I have read this forum and a few other websites and I think I've gotten myself confused more than helped my situation.

    Currently I have 3 home loans, all with CBA.

    Loan 1: $112k (was my PPOR)
    Loan 2: $30k (equity loan on Loan 1, not used for investment)
    Loan 3: $262k (now my PPOR)

    My Income: $70k
    Rental Income from Loan 1: $290/week

    I used the equity on Loan 1 to purchase property on Loan 3 (is that cross-collateralization??). When purchasing these places I never had property investing in mind, and now I'm not sure if I should convert Loan 1 to IO or not.

    Some of the other threads on here say that the PPOR should be IO with an offset account. I contacted CBA and they told me that they wouldn't do that.

    As I'm now looking to invest in more property, I was wondering if anyone could please provide some advice as to what I should do next, or should I just go and see a broker/planner?

    Thanks in advance for your assistance!

    Regards,

    Tja

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    September 20, 2010 - 11:27 am

    Hi Tja,

    It sounds like your loans are not crossed.

    Investors generally opt for interest only loans because the "interest" component is tax deductable. With the current principle and interest loan you have on loan 1, only the "interest" you pay can be claimed as a tax deduction – not the "principle."

    I'd have all the loans set up as interest only, with a MISA account (CBA's equivalent of an offset) against loan 3.  I can't understand why they said this was not possible.

    Your best bet is to speak with a good broker.

    Cheers,

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    September 20, 2010 - 11:46 pm

    Def talk to a broker. The loans set up like that mean it is costing you money – you should not be paying down an investment loan while you have non-deductible debt.

    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

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

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