future finance

If you haven't already set your home loan (PPOR) up as interest only I'd strongly advise you do so. If you anticipate that this property will become an IP in the future, there's no point in paying down the principle. Instead set-up an offset account attached to an interest only loan and deposit your excess funds in there. When it becomes an IP in the future, you can withdraw the funds and place them in an offset account linked to your new PPOR (this essentially increases your deductable debt). 

Depending on your current lender, you could access up to 90% of the value in your PPOR. This will give you around $100k for a deposit and purchasing costs on your next property (however, this is likely to incur some mortgage insurance fees – which won't be tax deductable because the purpose of the funds is to purchase a new PPOR). If you'd prefer to avoid mortgage insurance, you could access up to 80% of the properties value which would give you approximately $60k for your next purchase.

Cheers

Jamie

Hi Nurse

In addition to Jamie's excellent comments I would also ensure that the loans are standalone and not crossed collateralised.

This will make life easier when it comes to unlocking the equity.

Cheers

Yours in Finance

Hi Nurse

Yes lenders will take into consideration your current income and the current and potential rent into consideration when working our serviceability. Remember these calculations can vary considerably as some lenders take 75% of the rent others take 100%.

There are also a few other variable which means the figures can vary considerably.

You could get away with a 95% loan to valuation mean all you would need to access is 5% of the new purchase price plus costs however the costs will increase.

Probably a good idea to get your current PPOR revalued once you have finished the work and see what you can pull out of the place. Drop me an email if you want a Residex report on the property and i can send you one.

Some lenders using computer modelling to cover off on their valuations so can be a useful guide.

Cheers

Yours in Finance 

Hard to say with Anz as an interest only loan involves a whole new credit submission.

Is it under the Breakfree package ? if so you probably can do it fee free. If it is under Simplicity then might up for a couple of quid.

Either way gouging equity out with Anz is not the easiest especially when it is over 80% lvr but your broker should be able to advise you the easiest way around it.

Without actual numbers it is difficult to advise.

Cheers

Yours in Finance

Hi again Nurse1

Easy peasy. No need for a new application. You will be able to claim the interest repayments from the day it converts into an IP.
If it's currently a principle and interest loan, I'd recommend converting it to interest only. This is generally a simple loan variation which might incur a charge ($200 – $300). In fact, you should probably get onto this sooner rather than later – it's not very effective(from a tax perspective) to pay down the principle on a loan that is going to convert into a deductible debt in the future. If you would like to make repayments beyond the interest only portion, you could (depending on your current lender) set up an offset account against this loan.

When converting your PPOR into an IP, make sure that you obtain a written valuation for the property (a real estate agent appraisal should suffice). This way, when you sell the property in 10 years time, you'll only be paying CGT for the period that it was an investment property (and you'll have proof to back up your claim).

Cheers

Jamie

Hi Nurse

Your ANZ banker should be able to help you out with these.

Hi Nurse

Not wanting so sound unhelpful but the good ANZ banker that you recommended in another post should be able to help you out here – that's what he or she are being paid for. If they're not answering your questions or you suspect that they're not structuring the deal correctly then it might be best to seek advice from an independent mortgage broker that understands investors and what it you're trying to achieve.

Hi Nurse

I can't speak for that person but do you know if they are investors themselves? Do they understand how to structure finances correctly for ownership of multiple properties? These are some of the main advantages and value add of using an independent mortgage broker that does understand these factors and does invest in property themselves.