Rocket Loan Arrangement

Discussion in 'Loans & Mortgage Brokers' started by Fitzy1903, 9th Aug, 2015.

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  1. Fitzy1903

    Fitzy1903 Well-Known Member

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    Hi,

    I was just wondering if I could get some advice
    I'm hoping to see an accountant soon to get his thoughts in terms of this arrangement but thought I'd enquire here first.

    I'm looking to invest in Melbourne soon - about $450k. The current value of my house is $505k and the loan is $390k - I'm hoping to reduce it to $350k by putting $40k onto my mortgage, then get a rocket loan (Westpac) for about $55k (to avoid paying LMI as I wouldn't be hitting the 80% threshold) or maybe higher depending on the desktop valuation. This will go towards the stamp duty and deposit etc. Then I'll be able to put through the interest as tax deductions.

    Is this a good arrangement in terms of tax deductibility and the loan structure?

    Cheers,
    Mike
     
    Fitzy1903, 9th Aug, 2015
    #1
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    That generally works for the purpose you describe. There might be some additional things you could do, but purely for debt recycling against your own home it's fine.

    An easier way to do it might be to split your existing loan then simply use the funds to create an equity loan out of one of the splits. The only problem here is you wouldn't access any additional equity beyond your savings.
     
    Peter_Tersteeg, 9th Aug, 2015
    #2
  3. D.T.

    D.T. Specialist Property Manager Business Member

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    Sounds fine
     
    D.T., 9th Aug, 2015
    #3
  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Just set up a term loan rather than a LOC - it's a little bit cheaper and provides the same outcome.

    Cheers

    Jamie
     
    Jamie Moore, 9th Aug, 2015
    #4
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Jamies advice is sound.

    The RRIL has redraw and is available as IO for 15 years.

    The equity manager LOC has a little barb in the docs, that suggests the product is "repayable on demand"

    ta
    rolf
     
    Rolf Latham, 9th Aug, 2015
    #5
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    The Rocket can be used like a LOC I think - paid straight from the loan account.
     
    Terry_w, 9th Aug, 2015
    #6
  7. Fitzy1903

    Fitzy1903 Well-Known Member

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    Perth
    Thanks for your responses!

    What is the difference between a term loan and my arrangement?

    And what is RRIL?
     
    Fitzy1903, 11th Aug, 2015
    #7
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Rocket Repay Investment loan is a term loan.
     
    Terry_w, 11th Aug, 2015
    #8
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