Cross collateralising PPOR and IP properties - which rate do I get?

Discussion in 'Loans & Mortgage Brokers' started by meme plecko, 5th Apr, 2020.

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  1. meme plecko

    meme plecko Well-Known Member

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    Hypothetical proposition: say I want to refinance PPOR and one IP to ANZ and fix loans for two years. OO fixed rate is 2.19% and investment rate is 2.49%. if PPOR and investment property are cross-collaterised, would the resulting loan have owner occupied interest rate (i.e lower rate), or a mix of owner occupied and investment (higher) interest rates?

    If loans for both properties are comfortably under 80% of individual property values, would it be difficult to uncross the cross-collaterised loans/properties with the same bank?
     
  2. Terry_w

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

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    Anz looks at what the loan is used for so it shouldn't change things. If you are talking about one big loan that would be a tax disaster.
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Lets start with uncross :)

    Mouldy Oldie

    To cross or not

    there are a few more reasons not to cross these days

    ta
    rolf
     
  4. meme plecko

    meme plecko Well-Known Member

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    Thanks @Terry_w, this would be set up by having different accounts for each property, don't see any tax related issues
     
  5. meme plecko

    meme plecko Well-Known Member

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    @Rolf Latham, if we forget about equity release, just set and forget for two years, then a refinance to another bank would uncross if ANZ become difficult.
    What would be the other reason not to cross in current circumstances?
     
  6. Terry_w

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

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    What advantages do you see?
     
  7. Terry_w

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

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    Giving too much security for the loan.
     
  8. meme plecko

    meme plecko Well-Known Member

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    Having a large investment loan at OO rates (if I understand your question?)
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Each loan will be at its respective rate. The benefit only occurs at OO rates if you can blend the loan. Then it makes no tax sense which is what Terry said. What advantage ? None.
     
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  10. meme plecko

    meme plecko Well-Known Member

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    Thanks Paul
     
  11. Terry_w

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

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    I don't think ANZ will allow that.