Moving Off Line of Credit - St George

Discussion in 'Loans & Mortgage Brokers' started by Closet, 4th Apr, 2020.

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  1. Closet

    Closet Well-Known Member

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    I've got a Line of Credit with that I use for IP deposits etc which has sub accounts that are paid down and zerod over time then recycled into other investments. In the current environment and especially moving forward I see these as high risk and am looking to transition it to a standard loan product with splits.

    Half the facility is undrawn ie available credit and I am wondering what the best way is to transition across to a standard resi loan with splits but still keep any available credit as buffers...either available for redraw or preferably drawn before settlement and transferred into an offset
     
  2. Terry_w

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

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    ask them to convert the drawn amount to a standard loan. If PI there may not be a reassessment
     
  3. Closet

    Closet Well-Known Member

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    Thanks Terry I was going to run with PI for that reason - can the loan be fully drawn before switch and then put in an offset where I can then still use those funds for IP expenses and claim interest as deductions legitimately (when the amount in offset falls below the limit of the loan?)
     
  4. Terry_w

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

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    That is something you would need specific tax advice on. I wouldn't recommend it.
     
  5. Closet

    Closet Well-Known Member

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    Alternatively I guess the other option is to fully draw prior to switch then pay down most of the loan where I can redraw legitimetly when needed?
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    I wouldn't want to have any redraw in the current climate, banks can reduce the limit down and just like that your redraw disappears, especially in the current and future credit climate. Offset is preferable, just my 2 cents.
     
  7. Terry_w

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

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    Perhaps borrowed money could be kept in offset accounts and then chucked back into the loan and redrawn just before use - this should at least remove the risk of redraw being cancelled.
     
    Archaon likes this.
  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member

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    STG Portfolio is great for active DR.

    STG SVR is useless for that

    But has the above mentioned sting in the tail, AND has a repayable on demand clause

    Combine that with xcoll which some well published and respected property and finance person recommended............. What could possibly go wrong :(

    ta
    rolf