Hi to all. My current situation is as follows Loan A = PPOR Loan 292k P+I. Latest bank valuation for the home - 390k Potential available equity = (Valuation × 80%) less existing loan. (390000×80%)-292000 = $20,000. I am looking at buying IP for $350,000 paying 20% deposit.So I would require $70,000 to fund the purchase.I would like to use $50,000 from offset plus $20,000 from potential available equity to fund the $70,000 required for IP purchase. After reading Terry's post I came up with the following Loan A = 292,000 Split Loan A to Loan A1 = 242000 (balance owing) Loan B = 50000(balance owing) Transfer 50,000 from Loan A offset account to pay off Loan B. Now the loans look like this Loan A1= 242,000(balance owing) Loan B = 50,000(available to fund IP purchase). Find IP 350,000 and apply for IP loan at 80%. Loan C= 350000×80% = 280,000 Required funds = 70,000 of which 50,000 will come from Loan B but how to access 20,000 available equity. Should I apply for a separate Loan to get access to this 20,000.? Interested to hear your thoughts. Thanks for reading.. Cheers
Hi Terry Thanks for replying. Could you please also provide your valuable suggestion on how to use $20,000 equity. Should I set up a separate account for this say Loan D? For my situation ideally how the Loan structure should be? Thanks
Don't assume your lender will do redraw on the new io split as you pay it down. More than one lender has some silly traps around this Ta Rolf
I can increase from 50,000 to 70,000 but this way I will be using majoriity of the Loan A offset account funds and that's the reason why I want to tap in the 20,000 equity. If I can't use 20,000 equity and just have to use 50,000,I should either lower the amount I want to spend on IP or go into the LMI territory of 90%.Is tht right?
Sorry Rolf could you please explain what you mean with this. What I understand is the lender won't allow me to redraw 50,000 because I paid it down.?
eg some lenders like cba close a loan after it gets to zero some lenders like STG still force a full repayment each month while there is nothing nett owing on the loan and thus the principal reduces. Some lenders like stg wont allow you to draw on the new split until the next repayment cycle.............. Further, some lenders wont allow a simple limit split without a full app........... ta rolf
Thanks Rolf will call my lender Suncorp.If they doesn't suit my needs for the new loan structure, I better start looking at refinancing with a different lender and structure the loans. Ta
