Loan Structuring Advice

Discussion in 'Loans & Mortgage Brokers' started by Mel_C, 7th Mar, 2017.

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  1. Mel_C

    Mel_C Well-Known Member

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    Hi,

    We are buying a new investment property and are after some advice into best structuring of the loan. We have been given 2 options by CBA. At this point we will not be looking to buy anymore properties as we are on one income with 3 young kids.

    CBA options below which would be best for our situation?

    1. To do a loan of 500k plus stamp duty (10,156) secured against the purchase property as the prime security, and then have PPOR listed as a security to support the application.

    2nd option is to lend 20% plus stamp duty 110,156 against PPOR and the remaining 400k against the new property .

    Thanks for your help
     
    Mel_C, 7th Mar, 2017
    #1
  2. D.T.

    D.T. Specialist Property Manager Business Member

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    Option 2 is a million times better.
     
    D.T., 7th Mar, 2017
    #2
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Option 2 is better

    Option 1 is called Cross Collateralisation which isnt ideal mostly for many a reason

    To cross or not

    and there are other reasons to avoid same

    Good that CBA is offering the option - mot bankers and many broker are trained for "maximum contribution".

    ta
    rolf
     
    Rolf Latham, 7th Mar, 2017
    #3
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  4. Ross Forrester

    Ross Forrester Well-Known Member

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    Option 2 for the reasons outlined above.

    Make sure that the loan for the drawdown is split so that you can track the private portion and the business portion.

    You do not want to combine a private mortgage and a tax deductible mortgage.

    And have offsets for multiple accounts.
     
    Ross Forrester, 7th Mar, 2017
    #4
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  5. Mel_C

    Mel_C Well-Known Member

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    Thank you everyone you have been very helpful
     
    Mel_C, 7th Mar, 2017
    #5
  6. Brady

    Brady Well-Known Member

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    Just in case you're still not sure - definitely option 2 :)
     
    Brady, 7th Mar, 2017
    #6
  7. albanga

    albanga Well-Known Member

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    Option 1 for mine.
    - Less paperwork
    - Easier banking (who wants 3 loans when you can have 2)

    ........ok jokes :p
     
    albanga, 7th Mar, 2017
    #6
  8. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Haha - lucky! You were seconds away from being crushed under a mountain of contempt :p
     
    Jess Peletier, 7th Mar, 2017
    #7
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  9. God_of_money

    God_of_money Well-Known Member

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    Option 1 could be better if they offer you 3.77% (with CBA) across PPOR and IP, saving you 0.6%. just imagine interest saving if you have $2million loan
     
    God_of_money, 8th Mar, 2017
    #8