Do you think a new loan is better for me?

Discussion in 'Property Finance' started by Darlinghurst Boy, 5th Aug, 2015.

Join Australia's most dynamic and respected property investment community
  1. Darlinghurst Boy

    Darlinghurst Boy Well-Known Member

    29th Jun, 2015
    Darlinghurst Sydney
    My situation is i want to borrow to buy a Regional unit .
    Price is $120,000 rental return is 125 a week

    I have the 20% deposit.

    I want to borrow about $100,000
    I phoned Commbank i told them my story.
    They told me best thing is to use my current Redraw on my PPOR.
    I have up to 300k to withdraw at 4.99% for 21 years.

    But i dont think this is right to do be because i wont be able to claim tax decuctions on my investment property if i withdraw from my PPOR? Isnt that right??

    Shouldnt i get a separate loan for the 100k?
    Commbank told me this will be a lot of trouble, extra $300 for loan application,take 6 weeks blah blah, just withdraw it from your redraw said the loan officer, much easier !

    I reLly may need to see a broker ???
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    18th Jun, 2015
    Perth WA
    You're right - if you redraw off your PPOR, you'll have a mixed purpose loan. Easy to split off the investment portion though, so that's an option.

    You may need to see a broker just to get correctly structured for the future, regardless of this purchase - paying off a PPOR can cause tax issues down the track so best not to continue.
  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    18th Jun, 2015
    Melbourne, Nationwide
    Utterly terrible advice from the bank from someone who doesn't have even an inkling of understanding of tax issues. There's some very quick and easy alternatives which are going to be much more friendly to your tax deductions:

    1. Set up a second equity loan as you've suggested. Yes, it will take time, but more like 3 weeks.

    2. Split your existing home loan with one portion being $100k and the balance for the rest. Move $100k into the $100k split. You've now got your equity loan, you can redraw on this for your deposit. This should take about 4 days to achieve with no paperwork or application necessary.
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    18th Jun, 2015
    Canberra, Brisbane and Sunshine Coast
    Some bank staff are unbelievable.

    @Darlinghurst Boy - good thing you posted your question here. Jess and Pete might have saved you quite a bit in future deductible interest.