Below is our situation:
PPOR Purchased May 2009 @ $269k (3 bdr house)
Property location: Mount Sheridan/Cairns
Used $14k FHOG
Current P&I loan owing: $255k with BOQ (Home Loan Privilages Package, see below)
http://www.boq.com.au/personal_homeloan_privileges.htm
Amount in redraw facility = $5k
Likely current PPOR valuation at $285k
Likely rent if IP = $290+/wk
Our combined income before tax = $120k/pa
Our intent is to convert our current PPOR to IP by end of this year or early next year and find a rental property to stay in, and save as hard as we can for a 2nd IP.
At this stage we thinking of refinancing our loan to IO and opening an 100% offset account ($10/mth acc. keeping fee), redraw our $5k and dump it into our new O/A. Then continue paying off interest + principal (=savings) into our O/A.
We also note that our current loan package allows IO for max of 5yrs, not sure if this is an issue.
Please help with the re-structuring of the loan. It appears we have already blundered with dropping our extra repayments into the redraw facility. So, we would like to know the way forward??
nzuvo09 wrote:At this stage we thinking of refinancing our loan to IO and opening an 100% offset account ($10/mth acc. keeping fee)
Yep, do that.
nzuvo09 wrote:We also note that our current loan package allows IO for max of 5yrs, not sure if this is an issue.Not really, just change it back to IO when the 5 years is up.
[/quote]Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie for your valuable response.
Just wondering though whether we should leave the current loan type when refinancing to IO, and is there any implications with the refinancing, break fees, etc, and also any tax issues?
Also is it a good idea after opening the O/A to have all pay dropped into it and have the most of the bills if not all come from the O/A?
P.S – Also any positives out of our proposed future IP assuming we move out and become tenants to an affordable unit/townhouse?
nzuvo09 wrote:Thanks Jamie for your valuable response.No worries, you're welcome.
nzuvo09 wrote:Just wondering though whether we should leave the current loan type when refinancing to IO, and is there any implications with the refinancing, break fees, etc, and also any tax issues?At this stage, probably not. You're LVR at present is above 80% – which indicates you've already paid LMI. If you were to refinance to another lender you'd have to fork out LMI again. Best to stick with your current lender at the moment.
nzuvo09 wrote:Also is it a good idea after opening the O/A to have all pay dropped into it and have the most of the bills if not all come from the O/A?Yep, it's quite common.
nzuvo09 wrote:P.S – Also any positives out of our proposed future IP assuming we move out and become tenants to an affordable unit/townhouse?Not quite sure what you mean with that one.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie
Just trying crunch some numbers regarding the post tax benefit (in particular savings we will be making) regarding the above situation, and need some help!! See additional info below:
*Current PPOR repayments = $ 439/wk (P&I) @ 7.16% interest
*Move out and rent @ $300/wk max
*Likely rent if PPOR becomes IP = $290+/wk (conservative, probably $310+/wk)
*Current PPOR 7yrs old
*We likely to self-manage + maintain the property if it becomes an IP.Also when we move out do we need to advise the bank that the property has been converted to IP, and should we request valuation of the PPOR just before moving out? At the moment we have approached our bank, and no issues with financing to IO with 100% offset, and we intend to stay in the PPOR for at least 6 mths.
Hi again
No worries.
One thing to remember though – it's not just property management fees. There's rates, insurance, body corp (if applicable), etc. However, you'll also be able to claim depreciation on the property when it becomes an IP (don't forget to grab a depreciation schedule).
You should be able to get by with just a real estate agent appraisal as opposed to a bank val. Might be an idea to confirm this with you accountant though (mine said it was fine).
That's good news re the bank and the IO with 100% offset – best to stick with that lender for now.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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