Debt recycling for first investment property

Discussion in 'Introductions' started by scottevan808, 23rd Jan, 2021.

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  1. scottevan808

    scottevan808 New Member

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    Hi,

    I'm looking to buy my first investment property in the next 3 months. I already have a PPOR and have been building up cash in the offset for an investment.

    Investment property will be max $650k and 90% LVR.

    I've been looking into debt recycling and paying down my PPOR and redrawing 105% for (10% deposit & costs). With my investment loan (IO), would the borrowed amount be $682,500 (105%) or $585,000 (loan-10% deposit & cost)? Similarly, what loan amount would my repayments be based on?
     
  2. Terry_w

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

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    Borrow 25% secured against main resi and 80% secured by new ip.

    Seek professional tax advice but that is it in summary form
     
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  3. scottevan808

    scottevan808 New Member

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    Thanks Terry

    How is that done? I’m still unclear what that means for the amount I need to borrow from the bank up front
     
  4. Terry_w

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

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  5. scottevan808

    scottevan808 New Member

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    Thanks Terry, this is something I'll be looking into before making the purchase. If I'm entitled to an LMI waiver, would this change anything?
     
  6. Terry_w

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

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    only the lender.
     
  7. David_SYD

    David_SYD Well-Known Member

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    These tips are great.

    We have been actively looking to buy a new PPoR and convert our existing to an IP.

    Our fixed term is up for our existing in October ‘21. We bought August 2019 (Sydney 10km from CBD) and so we would have some modest price growth. Our LVR is 80%.

    We hope to buy our PPoR before May ‘21. We were going to refinance back up to 95% and drop the surplus into the Offset on our new PPoR. Would this be the way to go @Terry_w ?
     
  8. Terry_w

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

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    nope.
     
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  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    I will leave the tax side to TW, but a refi to 95 % with cash out will likley be pricey and not approved

    Seek some specific credit advice for your scenario

    ta
    rolf
     
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  10. David_SYD

    David_SYD Well-Known Member

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    :D I’ll seek advice.
     
  11. Terry_w

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

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    And then about the LMI!
     
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