Combining IP Loan with Home Loan

Discussion in 'Loans & Mortgage Brokers' started by who?, 13th Jan, 2021.

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  1. who?

    who? Member

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    So I've been thinking about consolidating the 2 loans (IP and Home) for the below reasons.
    1. To make it easier for repayments, since we'll be having just the one loan to worry about.
    2. When it comes time sell the IP, we can reduce the loan from the sale. (Yes, I've been browsing the house prices in the area, and we'll def make a loss from the IP come sell time)
    Now, it could be wishful thinking and may not be as straightforward as that, but just doing my due diligence to see if anyone has done the same before and what implications are if any, etc.

    Home loan is a smidge over 100K and IP loan is at 320k; Interest only, but that will be changing to I & P in a few months.
     
    who?, 13th Jan, 2021
    #1
  2. spludgey

    spludgey Well-Known Member

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    Your entire loan might become non-deductible! Don't do it unless you're 100% sure that's not the case!

    Also, your reasons don't seem to make sense to me. It's as easy to pay two loans as it is one, if they're with the same lender.
     
    spludgey, 13th Jan, 2021
    #2
  3. Lindsay_W

    Lindsay_W Well-Known Member

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    WHY do you want to do this, just for convenience of having one loan?
    Potentially make a complete mess regarding tax deductibility of the investment loan (or as Spludgey mentioned, could lose all tax deductibility of the investment loan) - best get some advice on that bit first.
     
    Lindsay_W, 13th Jan, 2021
    #3
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Really bad idea for the tax reasons already suggested. Kiss your tax deductions goodbye.
     
    Peter_Tersteeg, 13th Jan, 2021
    #4
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    mix loan resulting in you reducing your tax deductions, essentially throwing money away.
     
    Terry_w, 13th Jan, 2021
    #5
  6. Trainee

    Trainee Well-Known Member

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    Cant think of one good reason to do this.

    You cant handle two direct debits instead of one? Your repayments dont decrease. And your deductibility is messed up forever, reducing your deductions meaning you pay more tax than you otherwise would.
     
    Trainee, 13th Jan, 2021
    #6
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Had a mobile banker suggest same to a client this week :)

    ta
    rolf
     
    Rolf Latham, 13th Jan, 2021
    #7
    Lindsay_W and spludgey like this.
  8. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Just about all bankers do this cause they are lazy and dont want to do separate apps.
     
    Tony Xia, 22nd Jan, 2021
    #8
  9. Redom

    Redom Mortgage Broker Business Plus Member

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    A lot of borrowers prefer having one repayment for simplicity - but as noted above - the simplicity comes at the price of maintaining a flexible arrangement and giving up more control over your finances to banks than you have to.
    Rarely does simplicity benefit outweigh cost of giving banks more control.
     
    Redom, 22nd Jan, 2021
    #9
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Why using a offset for a equity-out may fail
     
    Paul@PAS, 22nd Jan, 2021
    #10
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