Changing loan security

Discussion in 'Loans & Mortgage Brokers' started by Frosty123, 3rd Apr, 2021.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Frosty123

    Frosty123 Well-Known Member

    Joined:
    12th Nov, 2015
    Posts:
    241
    Location:
    VIC
    Hi all,

    I'm hoping to get some general advise on a change in my loan security.

    In 2016, I had purchased an IP in Brisbane. I used equity in my PPOR to fund the deposit and purchasing costs (let's say 100k).

    I'd now like to sell my PPOR, but I don't want to pay out that 100k loan; as I'd lose the tax deductibility of the interest I pay on it.

    Ideally, I'd like to move this 100k loan across to the bank that I have the rest of the loan with.
    I understand the easiest way to do this (if my IP had increased by more than 100k), would be to take out another 100k loan with the bank that holds my IP loan, and have them pay out the loan secured against my PPOR.

    My question is

    1) Is this worth pursuing if my IP has only increased in value by say 50k
    2) Should this be a separate loan account, or is it ok if the bank increase my current IP loan

    Thanks
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,599
    Location:
    Gold Coast (Australia Wide)
    If your purchase loan secured by the brisbane IP was at 80 % , and the value has only increased by 50 k, its probs not gonna fly without LMI.

    Might be worth looking at a valuer shop to see if you can get the 125 k increase you would need at 80 %, assuming its an IO loan and hasnt been paid down

    ta
    rolf
     
  3. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

    Joined:
    23rd Aug, 2015
    Posts:
    1,546
    Location:
    Bella Vista
    The only way to do it as Rolf said is if the value of the property increased substantially to cover the original 20% you paid down.

    Wouldn't know unless you do a few valuations, but by saying that I don't know if the values increased by 20% since 2016 in Brissy.