Accessing equity to purchase IP - processing time

Hi PC,

I am looking at purchasing my next IP (viewing tomorrow) and plan to use cash which is offsetting my PPOR (via re-draw) for the purchase. This won't cover the full purchase costs and in total I will be $35,000 short.

I can access equity from either my PPOR or IP for the $35,000 shortfall (PPOR loan is with Bankwest, IP is with Macquarie). I haven't accessed equity before so am new to the process.

My questions are:
- how long does releasing equity take?
- can I request a desktop val to speed up the process?
- how many days would you include for the finance clause?

Many thanks!
M

 

Hey buddy

1 - depends on which bank you're applying with and the outgoing bank

2 - Yes, but also depends on the bank

3- to get full approval with Val will take 5-7 business days at least.

 

Loan interest on an IP is a tax deduction.

Interest on a PPOR is not tax deductible.

You might be better off with a bigger loan and leave money in PPOR offset.

 

Confused by the statement ‘redraw offsetting the loan’.

maybe this should be a written rule: get finance sorted BEFORE looking at property.

 

who will the IP loan be with?

 

Incorrect. The new borrowing vs the PPOR will be used to buy a IP. Its all deductible.
Many people incorrectly consider that the loan security affects deductions. It doesnt. The USE of the borrowed funds determines its deductibility.

Fred has a unencumbered home. He seek to borrow 80% from ABC Bank using the IP as security. he also seeks to borrow 25% from XYZ Bank on his own home title for legals, duty, deposit etc. He iwll borrow 100% of the cost. BOTH loan interest amounts are deductibe.

 

If I read that correctly. The OP is going to redraw money from PPOR loan and pay cash for the property. But yes a $35k loan for the property.

So if it's "redrawing" money not offset. Then the interest on PPOR. Part is now tax deductible and part is? The tax accountant will love this?