Refinance: Loan structure

Hi guys,

I am currently looking to refinance my PPOR and IP.

OO residential loan: $77k P&I (100% offset)
OO investment loan: $100k P&I (100% offset). This was set up back in the day but no longer required.
IP investment loan: $960k P&I. Secured against PPOR.

Was looking to streamline the accounts by consolidating the OO inv loan with the residential loan but have been advised by the bank that it needs to remain as an investment loan so this is not possible. It has been suggested to consolidate the OO inv loan with the IP inv loan but I am weary of the tax implications.

What would you suggests as the best way the structure these accounts for the refinance?

Thanks.

 

What's your plan?

 

If you don't need the OO INV loan, why not just close it? Or just leave as is, if it's fully offset and not costing you anything.

But - it's looks like your structure is a bit of a mess so a chat with a good broker would be worth your while. It looks like your INV property is cross secured. Best to uncross it, or move the INV loan onto the INV property to get your home out of the banks grasp ASAP.

 

The IP was purchased with the intentions of it being a inner city pad/future place for the kids (closer to unis) with the added benefit of a bit of a tax deduction (wife is a high income earner). 100% was borrowed using the PPOR as security. Our plan was to just debt reduce and look to release it from the PPOR once the loan reduced to 80%

Pending future, finding a cash positive investment would be nice.

If there’s not a more optimal structure, I’ll most likely just refinance with the current structure.

 

Is the PPOR AND the INV security, or just the PPOR?

If both, you'd be best restructuring it during the refinance - you can do this without needing it to reduce to 80%. No LMI payable either

 

Both PPOR and IP are secured against the IP loan. I spoke to my bank contact and they advised to remove cross collateralization I would have to increase my PPOR loan approx. $200k and reduce my IP by the same amount to bring the LVR down to 80% (value approx. $1mil). That's not as beneficial for tax purposes though?

 

Won't change deductibility of interest if you do it right

 

We can do it in a way that the tax side of things isn't affected, and kept nice and neat - it just depends how you set it up. We do this all the time for our clients.