Investment loan structure

Personally i would split the loans.

80% secured against the IP with 1 lender where you could look at a fixed or variable rate and 20% plus costs secured your PPOR with another lender with 100% offset account.

As the value of the IP increases shift the debt onto the IP and start again with another property.

Couple of little bits you could do with regards to possibly prepaying interest but all in all it depends largely on the property itself.

I am assuming you that the property is still negatively geared and you are buying it in your name ?

Cheers

Yours in Finance

Well i wouldnt be buying as Joint Tenants if you intend to pay down the principal. 

This needs a little more structuring. Have you considered a Discretionary Trust structure?

Would aid the Tax problem but will benefit you in the end.

Your mortgage broker should be able to give you some pointers in regards to the structure but i would be looking at something like if you were a client of mine.

Offset on the IP even and LOC on your place to cover a couple of deposits plus a DFT.

Cheers

Yours in Finance

No you cant get 100% lvr so unless you use some cash then you will need to gear against the PPOR.

I just wouldnt cross collateralise the 2 securities and hence would split between 2 lenders.

Dont forget you need to have the Trust set up before you enter into the Contract.

Cheers

Yours in Finance

So the trust needs to be setup before the settlement contract or the mortgage contract?.
and why can it be not done after the contracts are signed?.
I am interested in knowing this too please.

Since you have no other debt, i would suggest you seriously look at using a discretionary trust.

Depending on your situation you could gift or loan the trust the 20% deposit to get started. You should then keep gifting (probably) money from wages etc into the trust. The property will become positively geared quickly and this income can be distirbuted to your wife. You then just keep repeating the process, probably adding another trust every 2nd property.

why bother with CBA?

Did CBA tell you that their MISA account is not a fully transactional offset account.

Remember not all lenders calculate their offset accounts the same especially on interest only loans (The Dragon is another with a few funny quirks for investors) so probably whey your figures dont vary.

I cant see too much benefit in their Wealth Package.

Hate to disagree but i find Bank West good to deal with and have never missed one of my Settlements.

Course the are not a lover of Trust / Pty Ltd structures but in saying that which major bank is.

There are many other options especially when you are structuring the loan correctly.

Course from Friday you need to add on the extra 45 bps.

Cheers

Yours in Finance

What are you getting for your annual $350 and why would you Not want an every day transactional offset account on part of the loan.

You can't set up a decent portolio by crossing all of your loans and the easiest way to avoid this is use different lenders.

One lender to fund the deposits and acqusition costs on your PPOR (which you would normally link to an offset) and then a separate lender to fund the IP loan.

Each IP loan could certainly be with the same lender.

I spend so many hours a day restructuring clients loans especially CBA clients where the Bank have tucked up the client and then told them not a lot more they can do. (Had 2 deals in to for high net worth clients who were completely cross collateralised and now the CBA have told them they cant lend them any more money despite with 6 properties only being at a 55% lvr).

Just ask the CBA Bank manager how many properties he has and that will give you an idea of how successful he has been.

Cheers

Yours in Finance 

Sorry mate i couldnt disagree with you more.

My personal portfolio is worth over $18.5M with a a total loan of less than $2.4M.

I would never offer my PPOR (which is actually in the wifes name anyway) as security for another property.

Why wouldnt you take an 80% lend on the IP as mentioned earlier with a 100% offset A/c and if necessary an LOC on your place to fund the 20% plus costs.

Why do you want to expose your PPOR to more debt than necessary.

I am sure CBA have told you it is the way to go and sure if you decide they are right go that route but i can tell you i would never do that. If you buy in Trust you are going to have to gift or loan the funds to your DFT why again would you have your PPOR as security. Sorry but it is beyond me.

To conclude i still fail to see why even if you wanted to give the security of your PPOR why you would take the Wealth Package and pay $350 / annum.

Cheers

Yours in Finance

I am not being funny if your MB has not suggested this he is not acting in your best interest or has no idea how to structure an investment loan.maybe he hasnt ever purchased an IP either.

Yes you have the concept of the suggested structure.

All you would do as the Ip increases in value is redraw upto 80% of the increased valuation and then pay down the LOC.

Eventually the entire debt would be on the IP although the LOC could be used for the next property purchase.

For most clients we structure it that the LOC is sufficient for say 2 x 20% deposit plus costs just saves going back again and again to increase the LOC amount.

Cheers

Yours in Finance