Questions on loan set up and valuations.

So I've been reading lots on here, but I have a couple of questions I need help with.

I've recently accessed some equity on my PPOR and set up the splits as follows:
PPOR Valued at 535k (Realistically its a bit more but its near big power lines so that hurt a bit)
Owe 310k (280k IO, 30k P&I)
Redraw available on P&I is 10k
I have set up 2 equity splits of 55k each.
30k cash offset against the 280 IO
I have setup another offset, but with nothing in it.

IP1, H&L built two years ago for 325, owe 290, approx value is 380-400, roughly CF neutral

I am in the process of doing IP2, another H&L for 325k, which I will use about 40k from one of the splits as a deposit.

While the new H&L is being built, where should I be drawing the funds from to make the repayments until I get tenants? The redraw, or should I move that money into the empty offset?

Should I be trying to access any of the IP1 equity, or is it too early?

Any other tips on how I should juggle all this?

If I did eventually refinance IP1, where would I move that money to? Is it treated as CG taxable?

Another question is, do people organise their own valuation for the bank, or rely on the banks valuer doing it?

 

Where is your broker during all of this? You realise we don't charge a fee ;-)

Your broker will organise the vals for you in a cinch plus can advise on all of the above (possibly/possibly not the tax implications).

Regarding where you draw the funds from, you have cash in the offset whereas the redraw available is not cash. The redraw represents debt you've paid down which you can then re-borrow. You'll want to check the tax implications with a tax adviser, but from a purely mechanical perspective you should use the cash. That's why investors keep cash in the offset, to access when required.

You've paid down the debt which is the end goal so try not to back flip on that if you can avoid it.

Speak to a broker.

 

Thanks TBB.

My broker couldn't find me a deal better thank my banks. Incidentally, both are friends of mine.

 

If you pay interest using redraw you will be capitalising interest. This may or may not cause tax issues so seek tax advice on this.

 

Thanks Terry.

Once extra money has been paid into a loan, and by extension creating redraw, is it then tied to that loan forever (capitalised)? Or can it be redrawn and put into offset?

In future, am I better off only paying the minimum amount required off the loan and putting any extra into an offset?

 

Yes, from a tax point of view.

A payment into a loan is a permanent reduction to that loan. Redrawing is treated as a new loan.

 

A broker's job isn't to get you the best interest rate, although that is part of it. Their job is to provide the above advice and to help you execute it. A bank may or may not be able to do this, on your own it's doubtful you'll have the resources to achieve an optimal outcome.

 

Thanks. Any recommendations on brokers in Geelong?

 

Hit up a broker from the forum - they all work Australia wide and if you read their posts you'll soon see they know their stuff.