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A post for Terry

Discussion in 'Property Finance' started by Otie, 14th May, 2016.

  1. Otie

    Otie Well-Known Member

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    Loan docs have just been mailed to me after some changes were made to the original docs. I expect them to arrive this week.
    I have a PPOR that was just valued at 550k. Taking out some equity to buy an IP, and a new work car.
    I have arranged for splits as detailed below;

    a) $285,000 (P+I) This one is the PPOR debt. Offset will have nothing in it when they settle.
    b) 29,000 (P+I) The bank will pay 29k into the offset on this one I believe
    c)5000 (I.O) The bank will pay 5k into the offset on this one I believe
    d) 121,000 (I.O) Will be used for IP deposit and stamp duty.The bank will pay 121k into the offset on this one I believe

    I want to know if instead of parking all the money in the offsets, should I pay the amounts the bank sits in each offsets directly back into each split loan (and leave for example $100 in each one unpaid so the loans remain open),

    I would then use the redraw facility on split (D) to pay directly to the IP deposit, and the stamp duty via internet banking transfer from the redraw-And then do I just make the IO repayments on this each month, or should I put extra into the offset?

    and then use the redraw on split (B) to pay direct to the dealership for the work car- this one I was planning to put as much into the offset as possible each month to clear the balance so that once cleared I can redraw to use for an IP deposit- Or will this mix the loan?


    And I plan to use split (C) to pay for IP expenses directly from the redraw account as needed. Is this how I should be doing it if I do not have a LOC? And then do I just make the IO repayments on this each month, or should I put extra into the offset?
     
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  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    1. You shouldn't be parking in offsets at all.
    2. If you want to do this, then pay back into the loans and later use redraw.

    Just pay IO on these investment loans.

    Why not just use a bank where you can set it up with a LOC. AMP are the best for these sorts of things as you acn change accounts around at all without needing to reapply.
     
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  3. Otie

    Otie Well-Known Member

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    Does the LOC need to be through the same bank that I have used for the refinance/equity release or can you simply go out and get one with any bank?
     
  4. Otie

    Otie Well-Known Member

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    Is the way that I have intended to use them parking in offsets if I am doing this;

    should I pay the amounts the bank sits in each offsets directly back into each split loan (and leave for example $100 in each one unpaid so the loans remain open),

    I would then use the redraw facility on split (D) to pay directly to the IP deposit, and the stamp duty via internet banking transfer from the redraw-And then do I just make the IO repayments on this each month, or should I put extra into the offset?

    and then use the redraw on split (B) to pay direct to the dealership for the work car- this one I was planning to put as much into the offset as possible each month to clear the balance so that once cleared I can redraw to use for an IP deposit- Or will this mix the loan?

    The bank are settling the loan funds into offsets, I don't think I can get the funds any other way
     
  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    A LOC is just another home loan product - it would have to be with the same lender unless you want to refinance the loan.

    Which lender are you using? Ideally, you'd pay the funds back into the corresponding loan but depending on lender you may need to leave a bit in there so it doesn't close.

    If all the borrowed funds are lumped into one offset, you'll need to separate them back out again so it's obvious what the funds have been used for.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    LOC would need to be with the same bank that has the mortgage for the first loan.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If you borrow and park in an offset you should pay off the loan (or almost off, leaving say $100) and then redraw to invest. When you redraw the ATO considers this new borrowings so this loan will relate to where the funds are used.
     
  8. Otie

    Otie Well-Known Member

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    That was what I thought