IP deposit splits after sale

Just a really simple question for the brokers.

If I pay down loan on IP1 with lender A and have a 50k equity split to purchase IP2 with lender B and I then sell IP1.

Can I keep the 50k loan with lender A or do I have to pay it back since the security of that loan is now gone.

Assuming the answer is no I can't keep it, could I refinance IP2 to lender A and also take on the 50k loan and become its own security?
Even combine the 2 loans?

 

You borrow against property.

So if you borrow against property A and later sell property B the borrowings against property A will not need to be paid back.

But if you sell property A then you will need to either pay out the loans secured by property A or change the security to property B (or C etc).

Consider the tax issues too.

 

So the bank will accept change of security on an existing loan?

So can I change from-

Lender A - 50k loan - security IP1 (purchase expenses for IP2)
Lender B - 280k loan- security IP2

To-

Lender A - 50k loan - security IP2
Lender B - 280k loan - security IP2

The implications are good as the 50k I haven't had to pay back will offset PPOR, increase buffer and should remain deductible.

 

That is something you will need to ask your bank.

Tax Tip 74: Selling a property that secures other loans Tax Tip 74: Selling a property that secures other loans

 

Thanks for your link Terry, well explained as usual. Appreciate all your tax tips!