Advice on releasing equity in IP for PPOR

Hi all,

Hoping to get your feedback on how best to set-up my loan structure for releasing equity from my IP to most likely use on a PPOR. Situation is as followed:

• Currently renting, have an IP that used to be PPOR
• Want to buy a PPOR in the coming months
• IP loan balance $150k with $200k of usable equity – have never redrawn
• Have $100k savings in an offset account against the IP

I intend to refinance to something like this:

• $150k investment loan P&I (or maybe IO?)
• $200k owner/occupied loan P&I + offset account with the $200k equity in it

The equity plus the savings will be used as a deposit for the new PPOR.

I have a few questions:

• Is this setup enough to keep the loans unmixed for tax purposes?
• Would IO be better for the investment loan so that funds can be put into the future PPOR?
• Where is the $100k savings best kept while we look for a PPOR (maybe an offset against the investment loan?)
• Anything else I should be aware of?

Thanks in advance, really appreciate your help.

SydneyGuy

 

yes

depends

In the offset on the IP loan probably.
If you change the IP loan to IO now it will help you reduce it being paid off leaving more cash for the new main residence. You can always change the IO loan to PI later if you need to.

probably a lot.