PPOR - i/o loan with 100% offset

Hi All,

Have had a quick read of the forums but couldn't see any posts that matched my scenario.

Our PPOR is paid off but I was looking to access circa $250k - any suggestions on banks that would look at an I/O loan with 100% offset account
The PPOR value is > $800k so LVR is fine


Thanks

 

Hi @Ga55,
Welcome to the forum! There are heaps of lenders that will do IO with 100% offset, the sticking point will be what you are doing with the money?

 

Thanks Simon - some for reno, some to invest & some to just sit for rainy day !

 

A year ago it would have been near impossible to do this. Today there's a few lenders that would be happy to consider it. They'll really want a good explanation for it, but it can be done.

There are also alternate options with P&I structures that are more acceptable to lenders that might also meet your needs.

 

There are plenty of lenders who'll consider this - if the reno's are structural they'll want to do it as a construction loan rather than cash out though, but if they're just cosmetic you're all good. Shares are not an issue either - some lenders will want a letter from your planner to verify but others are fine with it.

IO will also be fine on the INV portion, or if the reno's are on an IP, but if the reno's are for your PPOR, many will prefer to see that P&I.

 

Talk to a broker about putting you onto a specific lender that will provide cash out without evidence up to 80% and a rate based on security type not use. This is one where a walk up at branch level could prove problematic.

 

As @Jess Peletier said, if structural renovations this will cause you issues. Shares should be no problem, but some lenders will want to charge you investment rates, money for a rainy day may be problematic if it's too much (what happens if you go down to the casino and put it all on black, lose and then go crying to ACA!).

 

I am by no means an expert so please double check this, but a few years ago I was able to borrow more money from my PPOR for a "holiday house", this was not seen as an investment as the "holiday house" was to be used for private use only and I got it under owner occupier rates, I believe you can do this only once with the same lender. Thats all the information that was supplied to the bank.

 

Nowadays the bank will likely hold the money and only release it once you have an unconditional contract of sale, or many will even attend settlement and hand the money directly the vendor. The days of easily getting $500k dumped into a bank account are pretty much gone with most of the mainstream lenders.