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Is the following refinance possible?

Discussion in 'Accounting, Tax & Legal' started by jrc77, 27th May, 2008.

  1. jrc77

    jrc77 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    147
    If I had a loan:

    Secured against my current PPOR (worth approx $475,000), had been payed down to zero, and then redrawn for investment purposes, Loan Balance $350,000 with $200,000 in an offset account (so paying interest currently on $150,000)

    and wanted to buy a new PPOR worth approx $900,000 (selling old PPOR). Is it possible to refinance this so that the new loan is secured on the new PPOR, and split like:

    PPOR split $225,000 (House cost - old offset - value of old place)
    Investment split $350,000 (refinanced from old loan)

    And having the investment split tax deductable?

    Regards,

    JR
     
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
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    Location:
    Sydney, NSW
    JRC77

    Your post is a little confusing.
    Are you saying that you want to sell the old PPOR and buy a new 1 worth twice a much but you want to keep the old PPOR investment loan of 350K?
    What did you buy with the $150K you have invested?

    Cheers
     
  3. Rob G.

    Rob G. Well-Known Member

    Joined:
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    Location:
    Melbourne, VIC
    Ditto BV.

    Was your original investment borrowing $350,000 ?

    If you invested that $350k and had merely parked private money of $200k in the offset whilst still owning the original investment then generally no problem.

    If you had borrowed $350k, purchased $150k investments and parked the excess $200k funds in the offset then when you withdraw the offset amount for the PPOR it now sounds like a mixed loan.

    Cheers,

    Rob
     
  4. jrc77

    jrc77 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
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    Paid down the loan balance down to zero, then redraw to buy $350,000 worth of managed funds. Then built up $200,000 in the offset account. The bit I am worried about is when refinancing it for the new loan.
     
  5. Billv

    Billv Getting there

    Joined:
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    Location:
    Sydney, NSW
    JRC77

    I believe it's doable if you have the correct loan type.
    I am thinking of a loan package such as the advantage saver of STGeorge where you can have multiple loans as a package and an offset.
    There are similar loan types around with other lenders.

    You could use the $200K as a deposit for the new PPOR and
    add the new property to your existing loan package.

    Your account will now have
    LOAN 1 for the old PPOR
    LOAN2 for the managed funds
    LOAN3 for the new PPOR
    OFFSET linked to OLD PPOR and as soon as you move into PPOR 2
    you link it to the PPOR 2 loan instead

    You could have serviceability issues when you buy PPOR2
    but you can tell your lender that the new PPOR will be an investment and you will be getting $XXX/week in rent.
    This will help with your serviceability and will increase your ability to borrow the $700K.
    Meanwhile you put your old PPOR on the market and sell it.
    When it sells, you then deposit the OLD PPOR money into the offset
    and have still retained the original IP loan.

    The other advantage of having this structure, is that because of the large loan size you could probably get 0.9% discount off their standard variable loan. Even when you sell PPOR1 you will still have a large loan so you should still be able to retain this discount.

    Cheers