discharging loan on ppor with bank

Discussion in 'Loans & Mortgage Brokers' started by pippen, 28th Dec, 2016.

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

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    Hi guys,

    After a few opinions or views on getting loan discharged from commonwealth bank.

    I purchased a ppor and pretty much payed it off and had /have a redraw facility i have never used.

    I went to the bank a while ago 6 to 9mths ago and got a payout sum and cancelled the direct debit and left $500 in the loan with means i pay around $1.80 a month in interest!

    Any pros or cons in discharging the papers and closing it all out?

    I am now investing in lic's and shares with my own savings and was thinking down the track to use a line of credit and setting this up when extreme buying opportunities arise.

    How do i go about setting this up? Should it be done before i discharge the title or after or it wont have an effect!

    Cheers guys!
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Sounds like you are referring to discharging the mortgage. This happens once the loan is paid out.

    If you wish to invest in shares you might want to seek advice on using redraw to invest and just parking money in the offset account.
     
    pippen likes this.
  3. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    Therein lies the problem, no offset only redraw on my ppor!
     
  4. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    You could use the redraw to invest and then change the product to one where there is an offset account.
     
    pippen likes this.
  5. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    As loan is in my and my partners name who pays lower tax is there a way i could set something up in just my name as i pay 40% marginal tax rate and can claim more of the interest expense as deductions?
     
  6. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Buy the shares in your name.
     
  7. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    And I should point out, in case it is not obvious, that people invest in shares to make a profit. So if you can claim more deductions it will mean you are going to pay more tax when it makes a profit.
     
    pippen and Perthguy like this.
  8. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,095
    Location:
    Sydney or NSW or Australia
    Who wants to make money only to have to pay tax? :rolleyes:
     
    tobe likes this.