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Selling PPOR with IP equity loan BankWest

Discussion in 'Accounting & Tax' started by Jimmy D, 19th Nov, 2015.

  1. Jimmy D

    Jimmy D Active Member

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    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?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  3. Jimmy D

    Jimmy D Active Member

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    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.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes. But not a refinance - a substitution of security
     
  5. Jimmy D

    Jimmy D Active Member

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    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.
     
  6. Tekoz

    Tekoz Well-Known Member

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

    Thanks.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
  8. Jimmy D

    Jimmy D Active Member

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    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.
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
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  10. Jimmy D

    Jimmy D Active Member

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

    Jimmy D Active Member

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    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!
     
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  12. JohnPropChat

    JohnPropChat Well-Known Member

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

    Tekoz Well-Known Member

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

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

    Jimmy D Active Member

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    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?
     
  15. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Considered selling the IP? Spousal sale? Related entity sale?
     
  17. Jimmy D

    Jimmy D Active Member

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    Debt recycling of equity in IP?
     
  18. Jimmy D

    Jimmy D Active Member

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    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.
     
  19. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    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 :)
     
  20. sanj

    sanj Well-Known Member

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    @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.
     
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