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Debt Recycling Strategy

Discussion in 'Investing Strategies' started by #Novice, 20th Apr, 2018.

  1. #Novice

    #Novice Member

    Joined:
    25th Aug, 2017
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    VIC
    Hi all,

    I'm trying to help out a friend with the following situation:

    PPOR valued $850K, mortgage of $400K owing on P&I
    Investment Property valued $550K, mortgage of $230K owing IO (rent of $1,556 per month)
    US property, loan of AUD$120K owing IO (rent of $9,000 per year)

    Current income AUD$70,000.

    If there are any brokers out there, is the situation maxed out in terms of borrowing capacity? If not, what would be the best suggestion to consolidate the loans with an LOC so a debt recycling strategy can be executed?

    Thanks for your help in advance.
     
  2. Hodor

    Hodor Well-Known Member

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    hodor
    I'm not a broker, however, here are some thoughts

    Why do you need to consolidate loans to employ a debt recycling strategy? Keeping things separate can be useful if circumstances change.

    How are you planning to recycle the debt? With your friends situation they can't capitalise interest and maintain deductibility on that amount.
     
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  3. #Novice

    #Novice Member

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    I was trying to ascertain if it would be possible to refinance the PPOR with an additional LOC attached to it and run the debt recycling strategy using the LOC. My main question is whether or not the serviceability is there to justify an additional LOC.
     
  4. Hosko

    Hosko Well-Known Member

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    Have you tried over on the sister site Propertychat? Lots of brokers seem to frequent there
     
  5. Hodor

    Hodor Well-Known Member

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    A broker will require more information to give an answer. As Hosko suggested go to PC and get in contact with a broker to run some proper numbers.
     
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  6. Terryw

    Terryw Well-Known Member

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    Probably borrow extra against the main residence at up to 80% LVR, under a separate loan.
     
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