PPOR loan v IP refinance?

Hi finance wizards

My child is ready to fly the coop. Is looking to purchase a PPOR, however she owns an IP already (no mortgage). She is on basic wage 45k and earns 26k from the ip in rent. Ip value (conservatively) is $550k. Looking at apartments up to $380k (has plenty cash for stamp duty/costs etc)

servicing based on her wage will make her borrowing capacity quite low, what’s the smart way to go about a loan? Is there any way she could mortgage the IP rather than the PPOR?

Not sure what paths there are we can choose as ideally it would be much better to have the IP mortgaged. Any suggestions?

 

Good position to be in with no debt!

She can mortgage the IP for the deposit or purchase however there would be no advantage in this as the funds would not be tax deductible as they're being used for owner occupied purposes (check with your tax guy of course).

On those numbers provided she has a decent chunk of deposit then she may have enough income to service the new loan.

 

Ah yes of course, that was the missing link my brain couldn't find this morning. Thank you!

 

Use a good Mortgage Broker

Based on limited data provided her borrowing capacity probably sitting somewhere around $460K as a maximum with a non-bank lender, that's using the rental income plus wage.

 

Lender could see the present net rent as a tax issue and need accountants letter to address what the tax liability may be and how it will be paid. The tax may be a outgoing that needs to be met. Brokers can assist with lender options and lender policies

 

Is this possible to convert ip to ppor and buy another ip? That’s way you can leverage from ppor and 100% tax deductible.

 

Refinancing investment or getting a new loan under new property wouldn't change much on the borrowing capacity as the funds used will be for PPOR and will be assessed the same.

Your best is to try your borrowing capacity with different lenders.