Selling PPOR with IP equity loan BankWest

Hi
I am selling my PPOR which has a home loan and an equity loan to finance an IP (both with BankWest).

I will be buying land and building in about 2 months.

How can I maintain the loan so it's still a deductible expense?

BankWest don't offer the option of changing the equity loan to a secured term deposit. I don't have enough equity in IP to secure this loan as well.

Can the equity loan be secured by my fathers property? Are there any other options?

My brokers said to carry the loan over one I buy land but selling the PPOR must be paying out the Equity loan right?

 

Tax Tip 74: Selling a property that secures other loans

You either
1. substitute security
2. move the loan over to the investment property, if enough equity
3. borrow off someone else and then refinance this with your new property as security

Get legal and tax advice.

 

Thanks for the advice.
Regard point 3. Does this mean I could get the loan secured from my dads property then refinance it later with new PPOR.

 

Yes. But not a refinance - a substitution of security

 

Thanks for the fast replies. Sorry last questions.
If I can't substitute securities to a term deposit with BankWest, could I do this with another lender?

Your item 3 borrow off somebody else, does this mean with another lender? And how would I secure it? With cash? I only have the cash after selling.

 

Hi Jimmy, I'm also curious to know about your scenario, let us know how you go here.

Thanks.

 

You could borrow from family -

you could refinance your investment loan with another lender that will allow cash to be used as security. Or easiest would be to use parent's property temporarily.

get legal and tax advice.

 

Thanks, I will try going with the parents option. Just so I know worst case. Does the option where refinancing with another lender (secured with cash) ok to be done after the sale of the PPOR? That's the only way I can secure it with cash.

 

No. You won't be able to settle on the sale until the mortgagee = bankwest, releases the title. They will not do this while a loan is secured by that property. So you would have to have a simultaneous settlement. i.e. settle on the refinance and the sale at the same time. Not an easy thing to organise.

 

Thanks for all your help. I'll post again on how I went with it all.

 

Just an update on how I went. Just about to settle on the sale of PPOR. My broker tried to refinance my investment loan with another lender before settlement with the aim to transfer to a secured term deposit at settlement. The lender said it would be fine, now found out that it couldn't be approved due to the house being sold (contract signed). Now I have to payout my equity loan which was funding part of IP. New PPOR loan will be 90k more and non tax deductible! Might have to write a new forum post for any advice!

 

Get specific advice. Things are already moving quickly to keep seeking general advice on public forums. Hope it works out.

 

Hm.. That's seems more difficult than what I thought to be.

Let us know the follow up thread here or PM me mate.

 

Just about to settle. Didn't have any luck so will be paying out the investment loan with proceeds of sale. My accountant and broker didn't have any other options due to the time frame.
I will now have 90k paid off the IP and will need to borrow $90k more for next PPOR. Does anyone have any goods plans?

 

If you have some spare equity you may be able to do some debt recycling?

 

Considered selling the IP? Spousal sale? Related entity sale?

 

Debt recycling of equity in IP?

 

I have but I don't want to get hit with cgt or pay stamp duty on transferring title, plus the IP is negative geared and my wife only works part time.

 

Using equity in IP to pay investment costs, and funneling funds saved into PPOR debt. Then using equity in PPOR for IP purposes. Speak to your Tax person

 

@Terry_w suggested 2 or 3 times that you get advice, the $500 or so dollars would have saved you all this last minute nonsense, hopefully lessob learnt in the future.

Its impossible to formulate a clear strategy if you dont know exactly what the possible good and bad scenarios are. Use experts in their field, pay them fairly and make decisions on a more secure footing.