Seeking some advice / suggestions. I currently have an IP loan (P/I) circa 40k which I am paying down using rent from 2 other properties owned outright along with partnership business income. At present working 3 days per week. Plan on fully retiring July 2020. I will need to purchase a new vehicle (Private use) prior to retiring as my current vehicle will be sold with my half of the business. Can I borrow monies at my mortgage rate to purchase the new vehicle? I will not be making any further property purchases. Thoughts?
You can redraw some of the extra payments on your mortgage and buy a car, nothing stopping you from doing this. The problem is the money you borrow back won't be tax deductible because the car is for personal use (it doesn't matter that the loan is secured by an investment property). If you do this, I'd suggest splitting the loan first so you can clearly define what money is for the car (non-deductible) and what money isn't (remains tax deductible). The better solution would have been to put all your money in an offset account rather than paying the loan down directly.
Comes down to servicing so you need someone to run the numbers and give you a yay or nay. If the servicing isn't there then there are several lenders that provide your ABN has been registered for 2 years, own residential property and you are purchasing the car from a dealership they don't require financials and the rates are cheaper than "full doc" rates.
Thanks Peter. From the old school here whereby I simply concentrated my efforts on paying down debt. No doubt this has been to my detriment but for my SANF has served me well. My thoughts were to pay down existing loan to near zero balance then borrow for the vehicle at the low mortgage rate over the longest time frame I can, giving me greater cash flow into retirement.
Thanks Shahin. Servicing will not be an issue as my last 2 years NOA's provide positive performance cash wise. Thanks for the heads up on the financials re: Car dealerships.
