Just about to refinance my IP to reduce my fortnightly payments and was wondering…..Should i be sinking as much money as possible into my PPOR and paying minimum repayments on the IP? Or, split the extra payments to put into both?
After refinancing the IP will be only slightly negatively geared.
Never reduce an IP loan if you have a PPOR loan.
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]
Forgive my ignorance, but how come?
Booge
Wow there old friend.
Hope you havent gone to far with the IP refinance because if you have sounds like the structure is all wrong.
Do as Jamie mentioned and stick the surplus cash into your PPOR offset account or directly in the loan.
Why are you refinacing ?
Admitedly there are some crash hot rates around at the moment just make sure you dont cross collateralise your loans.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
The IP is purely in my name from before i met my wife. Haven’t refinanced yet, meeting with Mortgage broker next week to discuss. The original loan was for $202K(30 year loan), now i owe $169K and was thinking of refinancing (25 year loan) so my fortnightly repayments are less.
Any advice would be appreciated prior to meeting the broker!
Your broker should be able to advise on the best structure. If you have any doubts about the way they're approaching things – then contact any of the decent brokers on this forum and they'll be able to sort it out for you.
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]
Hi booge
May i ask why you are making fortnight repayments on an IP loan especially when they are principal & interest repayments.
Extending the loan to 30 years will have absolutely NO difference to the repayments if they are interest only.You really should be making interest only repayments.
See what your Broker has to say and then post it on the forum and we can comment.
Remember most Brokers have no idea about investor loans.If you are not happy with the advice as i mentioned earlier shoot Jamie a line and get someone who knows what they are doing on the job.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
booge wrote:Forgive my ignorance, but how come?PPOR- Is a non -tax deducible debt..while the IP is.
Regards
MichaelMick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
booge
If I were you, Id refinance the PPOR as interest only with offset and the IP as IO.
Put any extra money into the offset for your PPOR.
This way you are taking full advantage of the deductibility of the IP loan.
The reason to have the PPOR as interest only with offset is in the future if you move house and that becomes an IP, you can shift the funds from the offset to the new offset of your nre PPOR, thereby once again taking full advantage of the deductibility on the IP.
I’d always assumed that paying down all debt was better. I was checking out the Chan-Naylor website, I think i may have to see them for the right advice.
Anyone here used their services?
Paullie wrote:boogeIf I were you, Id refinance the PPOR as interest only with offset and the IP as IO.
Put any extra money into the offset for your PPOR.
This way you are taking full advantage of the deductibility of the IP loan.
The reason to have the PPOR as interest only with offset is in the future if you move house and that becomes an IP, you can shift the funds from the offset to the new offset of your nre PPOR, thereby once again taking full advantage of the deductibility on the IP.
Spot on.
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]
And i certainly wouldnt be seeing C & N for the advice unless you go with a deep chequebook.
Call either Michael or Jamie and the credit advice is free.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Cheers, thanks Richard for the tip. In your opinion is refinancing on the remaining loan amount $169K as a 25 year interest only a better idea to free up cash flow? That was what my intention was. As opposed to just making my current mortgage of $204K an interest only loan?
You wont be able to refinance to a 25 year interest only loan (with the odd exception) but depending on the lvr could make it a 10 year interest only term.
No advantadge in refinancing to $204K interest only as you wont be able to claim the interest on the difference.
In my opinion you would better of to set up a separate split.I guess you need to ask "what do you want to achieve out of the process" and then work backwards from there.
Without more hard data in relation to your circumstances it is difficult comment fufther.Hope this helps.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
booge wrote:The IP is purely in my name from before i met my wife. Haven't refinanced yet, meeting with Mortgage broker nextI am concerned by this comment. What do you mean – are you talking about adding the wife to title? Mortgage brokers cannot give tax or legal advice and I would be concerned about deductibility of loans if you do transfer and get this wrong. eg If you transfer for no consideration will her half of the loan be deductible?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I’d still keep the title in my name only. Just trying to get the property positively geared by smaller mortgage payments.
Best to pay off non deductible debt first as this will save you tax.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thats what i was thinking by reducing the IP mortgage payments and paying the mortgage on our PPOR with the money saved.
Reduce the repayment by switching to interest only.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thats the way. Make sure it is interest only too.. If you have an offset on the PPOR even better as your rents and wages can sit in this and help save you even more.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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