Refinancing an IP loan with an existing Loan split against the IP

Discussion in 'Loans & Mortgage Brokers' started by Gypsyblood, 13th Jun, 2017.

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  1. Gypsyblood

    Gypsyblood Well-Known Member

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    Hi,

    I have not done this yet, but thought of understanding the implications before i do it.

    I have an IP with westpac which has increased in value. I am looking to create a loan split in order to release some equity to boost the deposit to 20% of a property i have just bought. I already put down 10% at contract exchange of this new property, but now need to boost it to 20% as i am buying in a trust structure with a company being a trustee and my lender of choice has indicated they need atleast a 20% deposit in order to give me the loan.

    1- If i get a loan split from westpac, what is my obligations interms of needing to stay with them due to this loan split? Can i still move/refinance to another lender? Do i need to pay out the loan split before moving or can i just move the split to the new lender? I believe there will be differences in valuation etc. that will make this movement quite complicated.

    2- Is it better to move to the new lender and request a loan split there? I am worried that will take too much time and the split wont get settled in time for my settlement date which is in a month and a half time.

    Thanks for the comments!
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    All loans secured by a property need to be with the same lender. You can't have a split loan across two lenders. You can certain refinance the property to another lender (now or in the future), but both loans will need to be placed with that new lender.
     
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  3. Gypsyblood

    Gypsyblood Well-Known Member

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    So effectively i either stick with Westpac for a while longer and get this done and then look at moving both the split and the original IP loan or i move now and ask for a split at the new bank.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I assume there's a good reason to move away from Westpac?

    Refinancing to another bank takes longer than setting up a split with an existing bank. Splitting then refinancing does mean double the effort, but it does get the equity release done faster.
     
    Last edited: 13th Jun, 2017
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  5. Gypsyblood

    Gypsyblood Well-Known Member

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    Hi Sorry i missed a reply to this, my apologies. Yes, the reason was their continuous jacking up of rates and finding a lot of good deals around me, at that time. To finish the story: I got my split from my PPOR instead at that time as it had equity, instead of touching that IP that i refinanced before my new loan settled :)