PPOR at 80% and future investments

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?

 

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

 

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.

 

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

 

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.

 

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.

 

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.

 

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!

 

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