Moving a mortgage IP to PPOR

Discussion in 'Loans & Mortgage Brokers' started by Burramys, 19th Jun, 2020.

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  1. Burramys

    Burramys Well-Known Member

    Joined:
    26th Jun, 2015
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    Location:
    Melbourne
    Advice is sought about changing a mortgage setup.
    IP $400,000, mortgage $200,000 IO, 3.44% $6880/year
    PPOR $600,000, no mortgage.

    Consideration is being given to taking out a fixed term P&I at about 2.3% on the PPOR and paying out the IP mortgage. This is $10,650 a year, $4000 more. Cashflow would be tight at first but it would gradually ease. It is hoped that as it's a PPOR mortgage the rate would be lower than an IP mortgage and that it would be an allowed tax deduction

    1 Would the PPOR mortgage interest be an allowed tax deduction?
    2 How likely is a lender to provide a loan as detailed above?
    3 Are there any other points relating to this that need to be known?

    TIA.
     
  2. Terry_w

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

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    1. could be depending
    2. depends on the circumstances. unlikely you will get owner occ rates with most lenders
    3. probably

    It seems like you are confusing loans and mortgages
     
  3. Burramys

    Burramys Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
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    Location:
    Melbourne
    Terry, thanks. I used the word "loan" when I should have used "mortgage". I think it may be simpler to find a new lender using the IP as security.
     

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