Loan question

Discussion in 'Finance & Banking' started by Jacque, 3rd Sep, 2005.

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  1. Jacque

    Jacque Well-Known Member Premium Member

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    This is a fairly simple question, but I really don't know the answer! And, it's bugging me....... :confused:

    If I top up on a current IO loan to draw down some extra equity (which I'm planning to spend on PPOR home improvements, for example) can I convert this portion only to P and I?
     
  2. D.T._

    D.T._ Well-Known Member

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    Hiya,

    I believe some banks will let you do it as another account. So in effect you'll have 2 loans.

    Eg House 500k
    Loan 1 = 350k IO
    Loan 2 = 50k PI same lender.

    That's similar to the way I'm setting mine up at the moment, I have a Lite loan from BankWest, and will get an Equity Release product ontop to make up the LVR I want, allowing me to invest further. Your bank would probably do the same, except just choose a PI product instead of an equity product like I did.

    Hope this helps,

    Cheers,

    Dave
     
  3. Jacque

    Jacque Well-Known Member Premium Member

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    Thanks for that Dave :)
     
  4. eddievanhalen

    eddievanhalen Active Member

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    May depend on the bank , but some at least have a product that can compartmentalise loans within a loan. I am in the process of investigating refinancing options for my PPOR which is on P&I and Westpac have their Rocket Repay product that allows me to draw down equity as an IO investment loan within that one structure. What you are proposing is essentially the reverse so I don't see why it couldn't be done.

    Cheers,

    Ed.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Hi Jax

    I assume that the security used isnt on the PPOR, in that case you must have a separate loan otherwise the thing will become a tax paperowrk mess anyways.

    PI is the soft option for most lenders so you should be fine

    ta

    rolf
     
  6. Jacque

    Jacque Well-Known Member Premium Member

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    Thanks Rolf :)
     
  7. Colin Rice

    Colin Rice Well-Known Member

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    SOP. Split the loan and instruct accordingly. Easy peasy.
     
  8. Terry_w

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

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    Colin, you are about 9 years too late!
     
  9. Colin Rice

    Colin Rice Well-Known Member

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    Cheers Terry, good call that :eek:
     
  10. jodie123

    jodie123 Active Member

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    Yep I've got a setup pretty much like this too. With ANZ, set it up so we could do renos on our PPOR.