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BA Fees into loan

Discussion in 'Property Finance' started by Robbo03, 9th Aug, 2015.

  1. Robbo03

    Robbo03 Well-Known Member

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    23rd Jun, 2015
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    Hobart
    Hi all,

    This may be a very broad or situation dependent question, but, if i was to use a BA to purchase an IP can that fee be added to the loan of the property so to not have an immediate impact on my cash flow?

    Thanks,

    Tom
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Kind of.

    If you're using an equity release against another property to cover the deposit/costs on the next then yes - you could use that loan to cover BA fees.

    Otherwise - you couldn't just ask the bank to lump on another $7k on top of your loan to cover your BA fee.
     
  3. Redom

    Redom Mortgage Broker Business Member

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    Sydney (West) and Canberra
    No, you can't add BA fees or stamp duty onto the loan for the property your going to purchase without increasing the 'loan to value ratio'. If a property is worth 400k, you can seek a 320k loan (80%) without incurring any LMI.

    If you're only after a 280k (70% LVR), you can effectively borrow 320k instead and use the extra 40k for things like BA/duties/reno's.

    Also, as Jamie pointed out, you can get a loan from a separate property and use it to pay for your BA fees.

    Cheers,
    Redom
     
  4. Richard Taylor

    Richard Taylor Mortgage Broker & Brisbane Buyers Agent

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    Brisbane
    Whilst the fees can be borrowed and interest claimed on the additional amount the BA fees themselves are not tax deductible immediately but are added to the cost base of the property when the asset is sold
     
    Terry_w likes this.
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    BA fees are a capital expense. Like all capital expenses they can be borrowed, but borrowing will result in interest being incurred. More interest means less cashflow, but at least the interest can be deductible.