Borrowing power and purpose

My fixed period for one of my loans are about to end and I was planning to draw equity from it with the purpose to subsume an existing split loan (from my PPOR). If this happens, I want to use the funds available from my PPOR (through a new split) for another IP deposit.

I'm wondering with the lender who I want to draw the equity from, if they ask what the purpose of the loan is for, do I say it's for a new investment property (what the end goal is) or to subsume (but not to reduce) an existing loan?

Thanks

 

No cash out, strictly to:

* value property and extend loan to 80%
* use the extra funds to reduce a split loan (with another lender)

So it won't be sitting in my account for other purposes. If possible I'd just direct it to the existing split loan. Or is this still considered cash out because I 'could' redraw it (after the split)?

 

This sounds like a cash out from a lender point of view. And a refinance from a tax point of view.

 

That probably sums it up. So despite the intention of paying down the other loan, they'll consider it cash out because it can be redrawn at a later date?

 

well they would be giving you the cash, hence cash out.