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Loan structure and interest rates

Discussion in 'Property Finance' started by Kingnothing, 11th Jan, 2017.

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  1. Kingnothing

    Kingnothing New Member

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    Hi all,
    I am following @Terry_w great advise on loan structure. Currently i am refinancing my PPOR and will split the loan into A and B
    Structure is:
    Loan A is for PPOR. P&I
    Loan B is for 25% deposit and costs for IP, secured against PPOR. IO

    Loan C for IP 80% will be in the future at another bank

    My questions is since loan A and B are split should they be the same variable interest rate?
    Lender says that because loan B is for an IP it attracts a higher interest rate. Can I just tell them loan B is not for an IP?
    Regards,
    Pete
     
  2. Lewis

    Lewis Member

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    Yes it is possible. I followed the same advice (Terry's) and was able to get loan B on IO owners occupier rate, same as loan A.
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Yep - most lenders charge a higher rate for IP loans - even if they're linked to an owner occ security.

    Cheers

    Jamie
     
  4. r3ckless

    r3ckless Well-Known Member

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    part iva
     
  5. Kingnothing

    Kingnothing New Member

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    Thanks all for the reply. It looks like most banks will charge a higher rate for loan b, but maybe some you can negotiate to match it.
     
  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    CBA as an example wont care, BUT it will affect servicing since the new B loan is for "domestic" purposes

    ta
    rolf
     
  7. Lewis

    Lewis Member

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    Hi rolf, can you elaborate this? What would be the difference of "domestic" loans from the servicing point of view? Are you referring to the bank considering the rental Income in the assesment?
     
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    domestic purposes is NON investment, persoanl use, not related to generating an income

    ta
    rolf
     
  9. Pamela Palmqvist

    Pamela Palmqvist Active Member

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    Your broker has done a good job - that's my ideal structure also.
     
  10. Air_Bender

    Air_Bender Well-Known Member

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    This might sound like such a noob question but does this mean that you're cross-collateralising?
     
  11. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide

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  12. Air_Bender

    Air_Bender Well-Known Member

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    Thanks Jess. :)
     
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  13. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Definitely shouldn't be cross collateralised - this is a simple setup most investment focussed brokers use. The deposit/purchase costs are covered by the loan secured solely to the PPOR, the remaining balance is secured solely to the new purchase. (in this scenario would be the 80% LVR secured Loan C)

    Every loan has to be secured somewhere at the right LVR, it's just a matter of making sure each loan is secured to only one property.
     
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