Line of Credit

Discussion in 'Loans & Mortgage Brokers' started by Hyong Cho, 4th May, 2017.

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  1. Hyong Cho

    Hyong Cho New Member

    Joined:
    20th Aug, 2015
    Posts:
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    Location:
    Sydney
    Hi,

    If I take a new line of credit loan against the equity on my existing IP and use
    the fund on the new line of credit for a personal purpose (eg car), would it cause any issues on
    my existing investment loan such as tax deduction?

    As far as I know, it is OK to have LOC for personal purpose as long as the new LOC account is
    separated from the existing investment loan.

    I heard loan contamination and wish to make sure it won't cause any future issues on my
    existing investment loan when I take a new line of credit loan against the equity on the IP for
    personal loan purpose.

    Thanks,

    Hyong Cho
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Location:
    Canberra, Brisbane and Sunshine Coast
    Sounds right to me....but I'm not an accountant.

    Cheers

    Jamie
     
    Ross Forrester likes this.
  3. Terry_w

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

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    As long as the loans are split then no mixing would occur.
     
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  4. Corey Batt

    Corey Batt Well-Known Member

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    Adelaide, SA
    You've worked it out well - keep it separate and then you're fine.

    Another note - make sure you do an accelerated repayment on the loan which mimicks a normal car loan of 3-7yrs (depending on your needs) - last thing you want is a LOC with a 30 year loan term and you have a car worth nothing after 10 years but all the debt still.
     
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  5. Hyong Cho

    Hyong Cho New Member

    Joined:
    20th Aug, 2015
    Posts:
    3
    Location:
    Sydney
    Thanks for your answers. Much appreciated.

    Hyong Cho