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Loan question

Discussion in 'Finance & Banking' started by Jacque, 3rd Sep, 2005.

  1. Jacque

    Jacque Team InvestEd

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    This is a fairly simple question, but I really don't know the answer! And, it's bugging me....... :confused:

    If I top up on a current IO loan to draw down some extra equity (which I'm planning to spend on PPOR home improvements, for example) can I convert this portion only to P and I?
     
  2. Dave

    Dave Well-Known Member

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    Hiya,

    I believe some banks will let you do it as another account. So in effect you'll have 2 loans.

    Eg House 500k
    Loan 1 = 350k IO
    Loan 2 = 50k PI same lender.

    That's similar to the way I'm setting mine up at the moment, I have a Lite loan from BankWest, and will get an Equity Release product ontop to make up the LVR I want, allowing me to invest further. Your bank would probably do the same, except just choose a PI product instead of an equity product like I did.

    Hope this helps,

    Cheers,

    Dave
     
  3. Jacque

    Jacque Team InvestEd

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    Thanks for that Dave :)
     
  4. eddievanhalen

    eddievanhalen Active Member

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    May depend on the bank , but some at least have a product that can compartmentalise loans within a loan. I am in the process of investigating refinancing options for my PPOR which is on P&I and Westpac have their Rocket Repay product that allows me to draw down equity as an IO investment loan within that one structure. What you are proposing is essentially the reverse so I don't see why it couldn't be done.

    Cheers,

    Ed.
     
  5. Rolf Latham

    Rolf Latham Well-Known Member

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    Hi Jax

    I assume that the security used isnt on the PPOR, in that case you must have a separate loan otherwise the thing will become a tax paperowrk mess anyways.

    PI is the soft option for most lenders so you should be fine

    ta

    rolf
     
  6. Jacque

    Jacque Team InvestEd

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    Thanks Rolf :)
     
  7. FMS

    FMS Perth Mortgage Broker

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    SOP. Split the loan and instruct accordingly. Easy peasy.
     
  8. Terryw

    Terryw Well-Known Member

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    Colin, you are about 9 years too late!
     
  9. FMS

    FMS Perth Mortgage Broker

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    Cheers Terry, good call that :eek:
     
  10. jodie123

    jodie123 Active Member

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    Yep I've got a setup pretty much like this too. With ANZ, set it up so we could do renos on our PPOR.