Loan movement between loans with same lender

Hi Mortgage experts,

I got multiple loans with a tier 1 lender and none of the loans are cross collateralised. Got single or multiple loans tied to a single property.

Just checking if someone who has exhausted his serviceability with the lender, wondering if there a way/bank's process using which he can move say for example 200K from his investment loan to his PPOR. Overall debt remains same.

Pls ignore the tax implications(benefit/drawback) for this question as keen in just understanding if this is possible. Appreciate your response on this.

 

It sounds like you want to do a 'security substitution'. Moving a loan from one property to another.

This does require a valuation to ensure that the property you're moving to maintains a total LVR of 80% or lower, but other than this it is usually fairly simple.

 

Yes, but by term "security substitution" it looks like the whole loan to be moved to a different security. I am only asking about moving a part of the loan. Say for example if you got two 600K mortgages and you decide to move 100K of mortgage from one to another security, both still able to maintain under 80% LVR.

 

To achieve what?

 

To eventually have PPOR mortgage free but currently to reduce debt and lower repayments on PPOR. Though, the tax benefit wouldn't be there as the increased loan tagged to IP, isn't tax deductible as I understand.

 

And it makes deductibility very messy. So why do it? Having the PPOR mortgage free doesn't mean anything if you are personally liable for it on a personally owned IP. You don't pay the IP loan, everything including the PPOR is still up for grabs.

 

Then split the loan into portions of $500k and $100k, then do a security substitution on the $100k. A bit of a process but it can probably be done.

A bit messy, but I can see a few reasons why you might want to do this. Are you selling a property and want to maintain deductible debt?

 

Yes it’s possible