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Refinanced - Please Help

Discussion in 'Property Finance' started by macdub, 18th Aug, 2016.

  1. macdub

    macdub Active Member

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    Hi all,
    I have just moved over to ANZ from Commbank. Now what happened is that I had a equity investment loan (45k) as a separate split with commbank which I had used towards IP deposit. This loan is refinanced to anz and again I have kept it as a separate split loan of 45k with anz. But broker set it up as a home loan product to get the same (better) rate as on PPOR. So even though its separate and funds were used for IP, anz has called it "home loan" on paper. I called broker and he is totally cool about it. He says no issues as its a separate split.

    DO I need to change it to investment loan?
    Does this affect deductibility issues?

    Thanks in advance.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The label on the loan doesn't change what you use the money for and thus should not change the deductability of the loan. Until about a year ago, many loans were called, 'home loan' regardless of how they were used.

    The broker did you a favor and saved you about 0.2% on that loan.
     
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  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    The tax man/woman doesn't care what the account's called - their only concerned with the purpose that the funds were used for.

    Cheers

    Jamie
     
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  4. tobe

    tobe Well-Known Member

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    Had the same issue a couple of times. ANZ's system can't have inv and oo loans on the same security it seems.
     
  5. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    You can do the same with CBA. Seems some banks are ok to code it OO if the security is OO.

    Tax deductability is determined by use / purpose of funds not what it is secured against.
     
  6. Weaver

    Weaver Active Member

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    So is it the banks happy to 'conform' with requirements to reduce their investor lending proportion?

    I've also clearly stated to a bank that my loan is for an IP but I think in small print somewhere suggests its PPOR. I'm happy that the tax assessor doesn't mind, but would the banking regulator ever hound the investor over this one?
     
  7. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    AMP are also doing IPs at OO rates if you have a PPOR with them or prepared to bring one over.

    Can be standalone as well of course :)
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    The only issue can be that if you're doing the loan as OO, you can't use gearing on it. This can stuff up servicing in some cases.
     
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  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Good point Jess.

    If servicing is an issue then do it as an IP and dont worry, be happy :)
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I thought they only did this if crossed?
     
  11. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    @Terry_w copy and paste from AMP BDM sent yesterday. I think it was xcoll but probably changed due to protests and common sense;

    Don’t forget we are still offering OO rates for Inv purpose against OO security whether stand alone or cross collateralised, on Pro Pack this means 3.85% pa / 4.21% pa1 for $750,000 and above, 4.05% pa / 4.41% pa1 for$250,000 to less than $750,000.
     
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  12. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Just realised I may have read it ^^^^^ wrong. Seems they will allow OO rates secured against PPOR if used for investment, similar to ANZ and CBA.
     
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  13. Brady

    Brady Well-Known Member

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    Not the case with CBA - if the purpose is investment is should be an investment loan.

    One of the questions to switch from IHL > HL which needs to be confirmed by the client is
    - The loan is no longer used for investment purposes
    Cant just be that the security address is owner occupied - that is one of the other questions
    -The security property address they are now residing in is no longer an investment property

    I've had a credit officer tell me it needed to be an IHL as the loan purpose was 'personal investment'
    I went to explain that until the purpose was made there is no deductability, but the loan serviced so in this case rolled over.
    Multiple times before this hasn't ever been an issue.
     
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  14. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Cheers for the update Brady.

    So are you saying they slipped through previously but are not anymore?
     
  15. Brady

    Brady Well-Known Member

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    It will still likely slip through pending type of application. But would be prepared with a plan B if credit (or auditors not sure on your process) picks it up.

    I'm still doing equity release 'personal investment' loans secured against the PPOR as HLs not IHLs as that's what I believe they should be. This is before the property has been secured.

    If the applications are done at the same time as purchase of the IP, then I will do IHL.