Loc and refinancing PPoR mortgage

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Michael
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@turnthestaticup
Join Date: 2016
Post Count: 1
March 12, 2016 - 6:57 pm
I have recently seen a mortgage broker about organising finance for an investment property. This is the the first time I have invested, but own home with a mortgage.
The meeting happened about a month ago, where he explain a lot of new concepts and terms. The meeting concluded with him putting in for an valuation on my house and submitting applications for a LoC.
He has since found a LoC with Suncorp at 4.72%, and would also like me to refinance/move my home loan for my PPoR to Suncorp.
He did explain the relationship between the PPoR mortgage and LoC, but given that it was a month ago, I am finding it difficult to remember who the two are related.
Can anyone explain how my PPoR mortgage and LoC are related. Is it necessary to have my LoC and mortgage with the same financial institution? Or is it possible to have my PPoR mortgage with one financial provider, and my LoC with another provider?
I am very new to investing.
Thanks in advance.
Corey Batt
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@cjaysa
Join Date: 2012
Post Count: 1,010
March 12, 2016 - 9:15 pm
As you’re accessing equity from the same property, it’ll need to be with the same lender.
Theres better options in my opinion than Suncorp for building a portfolio. If you want to get particularly fancy, you can setup a debt recyling structure to reduce your PPOR faster and continue to draw out investment lending – we’ve done this with a lot of clients helping them clear their mortgages twice as fast.
Essentially you’ll want your setup to have your existing PPOR mortgage + a seperate investment split as a LOC or normal term loan with fully transactional offset account. This will keep your personal and investment loans clearly defined which is important to keep the ATO happy.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide
D.T.
Participant
@dtraeger
Join Date: 2014
Post Count: 128
March 12, 2016 - 9:24 pm
Hi Michael,
Generally the PPOR will have 2 loans on it, one is for the PPOR itself which is being paid down and the other (which could be a LOC but doesnt have to be) will be for deposits on investment properties. Both of these have to be with the same lender.
The remaining 80-90% of the investment property purchase (since 10-20% has come from the above) can be with same lender if you like or a different one. e
Talking to an investment savvy broker who focuses on investors and invests himself is probably the best option, that way they can guide you in the correct direction. Talking to Corey above would be a great example of this.
Cheers,
Dave
D.T. | DT Property Management
http://www.dtproperty.com.au
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Adelaide Property Management - whole Adelaide metro
Hank Hong
Participant
@sid13473134
Join Date: 2016
Post Count: 13
March 16, 2016 - 10:19 am
Hi Michael,
The replies above are spot on.
With the broker setting you up with a LOC i believe is a expensive version of standard loan with a redraw facility.
Line of Credit works well for business owners who need to usually multiple daily transaction.
LOC also allows no repayments on this loan and they just it can “capitalise” the interest on top of the loan until it is maxed out.
If you were looking to just increase your loan and obtain funds ready for a property purchase (this being one transaction), creating a new home loan split and increasing with your current lender for a new home loan split would have worked. Your rate would have been half a percent lower, as it would have been classed as part of your home loan.
- This reply was modified 8 years, 9 months ago by Hank Hong.
Hank Hong
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Richard Taylor
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@qlds007
Join Date: 2003
Post Count: 12,024
March 16, 2016 - 9:17 pm
Michael welcome to the forum.
You can certainly do better than a Suncorp investment loan so would shop around again if that is what he has recommended.
PPOR with 1 lender on a split loan and then new lender for investment loan.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Alistair Perry
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@aperry
Join Date: 2004
Post Count: 891
March 17, 2016 - 10:13 am
Suncorp used to be very good for this sort of loan, as they didn’t have a premium on their LOC, but clearly they are not competitive any more. You can set up an appropriate structure, as per Richards suggestion, and pay under 4% for the money.
Regards