question about loan top up

Discussion in 'Loans & Mortgage Brokers' started by igor1234, 23rd Apr, 2020.

Join Australia's most dynamic and respected property investment community
  1. igor1234

    igor1234 Active Member

    Joined:
    26th Sep, 2016
    Posts:
    42
    Location:
    sydney
    Hello friends,

    quick question about loan top up as i am getting mixed messages from the lander (bank),
    My loan on my PPOR is ~ 60% and i want to increase it to 80%, same P&I. My current repayment is let say $3000 per month that didnt change from the original borrowing of 80% (i.e. just fluctuated with the changing interest rates.
    Will the bank just add the extra $ into the same loan account for me to use under same repayment with a new 30 year term, or will that be a separate loan and the repayment $ will increase? do i have a say here or its a standard procedure?

    thanks!
     
  2. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,769
    Location:
    Sydney, Australia
    What is the purpose of the 20% equity cash out?
     
  3. Morgs

    Morgs Well-Known Member Business Member

    Joined:
    7th Dec, 2017
    Posts:
    1,041
    Location:
    Sydney NSW
    Differs by lender... different options, processes & requirements/qualification
     
  4. igor1234

    igor1234 Active Member

    Joined:
    26th Sep, 2016
    Posts:
    42
    Location:
    sydney
    the goal is deposit for new purchase.
    Thank you
     
  5. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,769
    Location:
    Sydney, Australia
    Best to get specific advice from an investment savvy broker so you structure the loans in the most optimal way in line with your goals.
     
  6. Terry_w

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

    Joined:
    9th Jun, 2006
    Posts:
    30,862
    Location:
    Australia wide
    Sometimes the wording people use makes them confused.

    You wouldn't want to 'top up' a loan, but borrow against the main residence to invest, under a new loan split.
    There are tax considerations too as to where the borrowed funds are deposited too. Put in the wrong place and the loan interest will not be deductible so you need a broker and also get some tax advice as well. There is a post on here this morning where the borrower stuffed things up and lost the deductions.
     
    Lindsay_W likes this.
  7. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    2,459
    Location:
    QLD
    If you use a broker you'll have a say, going direct who knows, they may want you to cross the securities etc.
    Plenty of good brokers on this forum, even if they don't advertise themselves as 'investment savvy'
     
    MC1 and Terry_w like this.
  8. Kremitz

    Kremitz Active Member

    Joined:
    11th Nov, 2017
    Posts:
    35
    Location:
    Nsw
    Where should this be placed then?

    We might be in the same boat as the OP as we are looking at refinancing to get some equity to be used as part of deposit of IP.
     
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    15th Aug, 2005
    Posts:
    7,538
    Location:
    Gold Coast
    Not advice as Im not a tax guy

    Separate loan split with an attached CLEAN offset.

    Best practice is a small LOC that you can vary the limit of against you other SVR loans, espcially in the DR space. Products like STG portfolio can be good, BUT are not suitable for long term resilient debt

    Recently have had to turn away clients that arent " teachable" where the pork barrel lender rebates are of greater perceived value than the capacity to DR properly.

    Get 4 k, lose 10s to 100s of thousands over time.

    Loans aint loans

    ta
    rolf
     
  10. MC1

    MC1 Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    324
    Location:
    Melbourne
    What is an investment savvy broker out of curiosity?
     
    Lindsay_W and Terry_w like this.
  11. Kremitz

    Kremitz Active Member

    Joined:
    11th Nov, 2017
    Posts:
    35
    Location:
    Nsw
    thanks Rolf for the tips.

    What is SVR and DR?
     
  12. Terry_w

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

    Joined:
    9th Jun, 2006
    Posts:
    30,862
    Location:
    Australia wide
    You can out it anywhere but make sure you get tax advice before using it. See my tax tip 1
     
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    15th Aug, 2005
    Posts:
    7,538
    Location:
    Gold Coast
    SOZZ

    Industry Jargon for Standard Variable and Active Debt Recycling

    ta
    rolf
     
  14. Kremitz

    Kremitz Active Member

    Joined:
    11th Nov, 2017
    Posts:
    35
    Location:
    Nsw
    Thanks Terry and Rolf
     
    Terry_w likes this.