Investment or home-owner interest rate

Discussion in 'Loans & Mortgage Brokers' started by Patricia, 3rd May, 2021.

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  1. Patricia

    Patricia Well-Known Member

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    If we use our PPOR as a security for an investment loan, what interest rate is applied for that loan, whether it is investment rate or home-owner rate? Thank you.
     
  2. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Most lenders would have this as an investment rate
     
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  3. Chris B

    Chris B Well-Known Member

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    The rate is normally based on the purpose of the funds, but there are some non-bank lenders (Liberty or Bluestone) who will apply the rate based on the security, instead of the purpose.
     
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  4. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Majority will price the rate based on usage of the loan. However there are a couple that will price the loan based on the security.
     
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  5. Patricia

    Patricia Well-Known Member

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    If we refinance the loans (original loan and investment loan secured by the same PPOR) after we sell the investment property, to make it into one single loan against PPOR, could we have the owner occupied intetest rate? Thank you.
     
  6. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Why don't you want to get seperate loans to begin with? Each loan secured against its individual security ?
     
  7. Patricia

    Patricia Well-Known Member

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    We had seperate loans for each property, then we sold the IP and transfered the loan to our PPOR. We did not pay off the loan upon the sale of IP but used the funds to purchase another IP. So now we are having two types of loans tied in our PPOR. We want to refinance to get a better owner occupied loan if possible.
     
  8. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    If you refinance the loan to another lender, you will most likely get owner occupied rates for all loans as they won't be able to see the link in what you've done in the past with your IP.
     
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  9. Lindsay_W

    Lindsay_W Well-Known Member

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    Are you selling the IP though?
    Reason I ask is there could be tax implications if you were to combine the loans but keep the IP, best seek some specific tax advice if the intention is to keep the IP.
     
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  10. Terry_w

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

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    It depends how you structure it and which lender. If borrowing further and using those funds for investment purposes then generally the investment rate will apply.
     
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  11. Terry_w

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

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    Sounds like you may not have sought tax advice. Have you been claiming the interest on the loan? Potentially none of it is deductible.
     
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  12. Patricia

    Patricia Well-Known Member

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    Use the funds to buy another IP. Thanks for your advice
     
  13. Terry_w

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

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    I don't think that answers my question.
     
  14. Patricia

    Patricia Well-Known Member

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    We sold the property just a few months ago and used the funds to buy another IP. The loan was transferred to our PPOR. What could have happened is we transferred the loan into our IP. Thats what we plan to do. If we could use PPOR rate for that loan as advised, we would keep our PPOR as our security.
     
  15. Terry_w

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

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    Are you claiming the interest or do you intend to? It sounds like none of the interest is deductible so you have potentially cost yourself a lot of money by doing it that way.
     
  16. Patricia

    Patricia Well-Known Member

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    We want to claim the interests. Sounds like we can't.
     
  17. Terry_w

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

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    I don't know if you can or cannot, but how does the loan use relate to the new investment property?

    You should seek advice
     
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