I please help! I am so confused with refinance broker has done

I was after some advice first my situation

I had 2 loans for 2 IP's

1. $155k left owing

2. $230k left owing

I could get a lower rate and wanted to set up so that I could get a loc to invest in shares

So what has happened is I have been refinanced with new loans and new bank great interest rate ( fixed)

I now have

1. Loan $178 owing

2. 230k owing

This bank is now sent me a bank cheque for around $19k ( minus fees etc)

This isn't what I was expecting and I have no idea what to do for tax purposes.
What is the best way to set it up so that the $19k can be used for shares but that I can claim interest?

Have I even got what I asked for?

I assumed the surplus funds would just sit in a redraw for that loan how do I claim the interest if I just have the bank cheque amount?

Any help is appreciated

 

My first thoughts:
Split the loan
Bank the cheque into the new split (leaving $1 so it doesn't close)
Then do whatever you like with your newly access equity.

Then again,
Who knows, (probably Terryw or another tax advisor)
Apparently there's a million ways to screw these things up.

 

Which is the new one?

Loan 1 or 2? Man I'm so confused they are for two seperate ips

Sorry if I am coming across thick ..... when it comes to this I am

 

If your rate is fixed, you won't be able to split the loan without breaking the rate. You certainly don't have the LOC you were after.

If it's IO, it will likely be fine as the interest will be easily apportioned if you spend the $19k on shares, and you can split it after it comes off fixed. If it's P&I, I would have a chat with your broker and ask them to rectify it.

All in all, this has been poorly structured.

 

It is p & i!!!!!!!!
So what do I say to said broker Jess in regards how to structure it?

 

What was the discussion with the broker?
How come you signed documents for $178k when your loan was for $155k without knowing the plans for the extra funds?

 

Unfortunately I trusted him that this was how it was being set up! My mistake

 

Mistake on the brokers side, but also should have been picked up by yourself.
Live and learn, hopefully you can get it sorted ASAP without too much issues.

 

So if I just put bank cheque on loan (178k) my surplus funds then can I redraw and invest in shares?

 

Yes but would want to have the loan split.

 

Be careful with this. If the $178k loan is fixed, you may loose access to the $19k and have early repayment penalties.

I'm not sure there's enough information being disclosed to give the correct answer.

 

What else do you need to know Peter happy to provide I just want to get fixed

And I don't want to stuff it up!!!

 

$178k loan is it fixed or variable?

 

Peter if there wasn't any penalties ie early repayment and I. Plus get access is this possible and it won't be seen as a mixed loan?

 

Fixed and p and I

 

Okay, so your loan is fixed.

Fixed loans have minimum extra repayment amounts. If you deposit $19k on there:
1. You'll probably pay a penalty fee because most fixed loans only allow $10k in extra repayments per year.
2. Many fixed loans don't allow redraw of extra repayments. You may loose the $19k by putting it onto the loan.

Is the $230k loan fixed? If it's variable you may be able to split that loan as Brady suggested and still get a reasonable outcome.

 

Likely going to have an issues during the fixed period
- usually has maximum amount you can repay
- not able to redraw
- not able to split

I would be going to back the broker to fix up the mistake - if that fail's maybe lodge a complaint, could be hard given you signed the documents.

 

Both loans are fixed I have another loan on another investment property that is variable could I put it on that?

Set up a split of 20k and dump the 19k in there? @Brady @Peter_Tersteeg

 

No don't put in on that. Issue is you have $19k which has come from the $178k loan.
You go and put that cash somewhere else just creates further problems.

Ideally you would have had loan for the refinance and loan for the split.
If loan wasn't fixed you could still get this outcome.
As it's fixed you need to go back to the broker to get it sorted how you wanted.
If not them the bank the loan is with.

 

Thanks Brady I appreciate your time and effort!
So I just ask for a 20k split loan from the 178k
So essentially would have a 20k loan and a 158k loan

Is that correct?