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PPOR at 80% and future investments

Discussion in 'Property Finance' started by albanga, 30th Nov, 2015.

  1. albanga

    albanga Well-Known Member

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    Hey All,
    Just a quick one, anyone who has spent anytime on these forums understands some lenders are good for investments and some not for various reasons.

    I was curious however that if you have a PPOR and never plan to access equity over 80% is there any reason you could not just look for the sharpest rate?
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    If it's just a set and forget loan with the intention to pay off the mortgage asap and never release equity, etc - then lowest rate could make sense.

    Cheers

    Jamie
     
  3. Redom

    Redom Mortgage Broker Business Member

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    Yes it can definitely make sense - the cost saving can be substantial on larger loan sizes and will offset any potential future refinance if required (at that LVR) in a pretty short time period. You get what you pay for though.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Don't forget
    - offset account
    - IO ability
    - they way equity can be released such as LOC products
    - if no LOC, can you have a second offset account?
    - Is redraw available?
    - if no LOC can the loan be paid down again and redrawn
    - timing such as waiting periods between valuations?
    etc
     
  5. AusMover

    AusMover Well-Known Member

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    Hi Terry,

    Interesting that you mentioned a 2nd Offset account ....

    What's the best use of a Second Offset Account?

    I have been given a Second Offset Account with my PPOR loan, and I have no clue what to do with it, as the 1st Offset is doing the job.

    After about a year's time, I would try to access equity from PPOR. Would you think the 2nd Offset would come handy at that time, but how? :)

    Thank you.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You should avoid parking borrowings in an offset account where possible, but where the lender is inflexible it may be possible to drawn down borrowings into a second offset account, which will never have any deposits other this the loan. This way you can trace the borrowed funds and interest may be deductible - but seek tax advice before trying this.
     
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  7. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Some of the cheapy lenders do have limitations releasing equity even under 80% - make sure you check their policy to be sure you're not going to get stuck. For eg, some will want to see a CoS before releasing funds, some will want to see servicing demonstrated on the end debt of the new property etc, so just be aware of what you're getting yourself into.
     
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  8. albanga

    albanga Well-Known Member

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    Hi All,
    Thanks for all the great replies.
    @Jess Peletier my main reason for asking was more to do with having a low rate to really hammer down the mortgage. If something changed and I wanted to access more equity then I could refinance to a new lender more flexible in this area.

    @Redom , pretty much with everything in life hey!
     
  9. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If you didn't need equity at all, sharp rate it is! :)