Refinancing, what to do with equity?

Hello,

I currently have four IP's, each securing one loan (all I/O). I'm going to be moving into one of them in the near future. I need to refinance them all so I have the PPoR securing the correct amount of debt (the original purchase price). I intend to convert the loan associated with the PPoR to a P/I loan.

When I refinance the four loans, I expect I will have built up quite a bit of equity. My question is, what can I do with this equity? I can't service any more debt at the moment (and I don't really want to right now).

The only idea I came up with was to get a LoC to pay my investment expenses.

I'd welcome any ideas/suggestions etc about what I might do with this extra equity.

Thank you as always,
SupaRex

 

What's the PPOR securing now?

 

The PPoR is currently a rental that I'll be moving into. It's securing one loan, but due to refinancing in the past, it is securing more than the original purchase price. I intend to refinance to the correct level (with my accountant's help) and distribute the extra to the other three loans (all deductible as originally all four IPs were just that - IPs).

 

Good that your accountant is on the job, it sounds messy!

If you can't service any additional debt it's probably unlikely that you'll be able to create a new LOC - the banks view servicing more conservatively than the average persons personal budget, so if your budget won't allow it, it's highly unlikely the bank will.

 

I could service a LoC that I was using for just expenses, what I more meant was I couldn't service a full blown home loan.

 

Chat to your accountant about the LOC also, the ATO can sometimes deny deductions on this so best to get his tick of approval first.

 

Thanks Jess, I will. I had no intention of using the LoC to make interest repayments (I know that's a no-no), I was thinking of PM fees (if possible) and maintenance.

LoC aside, do you have any suggestions about how I could productively use any extra equity I find I have?

 

This sounds dangerous to me.

Can you give some rough numbers?

 

Originally paid $250k for the property with a $25k deposit, so $225k. This was an IP remember. Refinanced and used some cash to buy next IP, and so on. Through the refinances, I know have the IP I intend to move into securing about $300k. Remember - as of right now, all my properties are IPs.

Once I move into the IP and it becomes a PPoR, I don't want to be paying off $300k, I want to be paying off $225 - the original purchase price less the deposit I paid.

That's my plan/understanding anyway. Happy (well, not happy, but I'd like) to be be corrected if I'm wrong.

 

Yes, that sounds fine. Split the loan to $225k and claim the other portions of the remaining loans against the properties that the loans related to.

 

Possibly income producing shares would be worth looking into. Depends on your cashflow/budget/priorities.

 

Thanks Terry. I didn't even think of simply splitting the loan. That would be much easier. While I'm here, thanks for your "Tax Tips" section, reading through them now

 

Hi Jess, thank you for the suggestion