Currently have:
PPOR – Value $1.5mil (nothing owing)
IP1 – Value $352,500 ($312,000 owing) – PPOR used as security only, I hold the title for this IP.IP1 investment loan with CBA.
I'm looking at borrowing another $250,000 for IP2.
Since my PPOR is used as security for IP1 and will more than cover an extra $250k, I'm assuming I should simply get another home load with CBA and hold the title to IP2 as well.
Theres no ccc. because CBA will only hold one title.
Sound about right?
Paullie,
Sounds like you have a lot of equity sitting in your PPOR. If I were you I would be looking to take out a line of credit against your PPOR. I cant see why the CBA wouldnt give you at least 600k line of credit. The best thing about a LOC is that you only make repayments on the money you spend rather than the whole amount. In some situation you can use you LOC as a deposit and then borrow more money. Obviously you have to make sure you dont get yourself into trouble but a LOC can be very useful.
if the LOC is secured against PPOR doesn't that mean it is not an investment loan and would not be tax deductible?
Corie, doesn't a LOC also attract a higher interest?
To answer majorising, it doesnt matter where the money comes from, all that matters is what it is used for. So it would still be deductible.
I'm still all for separate loans for each IP to make everything easy.
Yeah Paullie you are right, it doesnt matter where the money comes from, it depends on what it is used for. If you use it to buy a new car the interest component will not be tax deductable. But if you use it for an investment property the interest IS tax deductible.
As for the higher interest rate, it may be slightly higher like .2 or .3% higher. For the flexibility and convenience who cares about .3%. You should be able to negotiate a .5% discount at the moment anyway. Speak with your broker.
Corie
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