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Should the loan be changed ?? Advise please

Discussion in 'Property Finance' started by Kelly88, 27th Jul, 2015.

  1. Kelly88

    Kelly88 Member

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    Just wondering if anyone can give me some advice on this. 10 years ago, we had a new loan on an investment property. As we had so much equities on our house, the bank made a mistake of putting our house as the guarantor on the loan. So we were sent the title of the investment property. The new loan is still put as an investment loan.

    Currently, the loan remains the same ~ 300K investment loan - under our main residence, but it was used to buy the investment property.

    Just curious, as the address on the loan is our main residence, is it OK to change it to a normal loan (not investment loan) ??? I'm not sure if I'll bother to do it, but just a thought.

    Thanks
    Kelly
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    When you say "is it okay?", I would say it's probably not okay, because it's dishonest. But if the question is 'can I do it?' Then yes, you can. :)
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Not sure what happened, but sounds like your PPOR may be cross collateralised with the investment. If so then change that so the IP loan is secured only by the IP loan.
     
  4. Perp

    Perp Well-Known Member

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    I assume they're trying to avoid the ~0.25% interest increase for investment loans.

    Would telling your bank that it's not an investment loan, but a PPOR loan, affect your tax deductibility? (I'm thinking not, but wanted to confirm.)
     
  5. Kelly88

    Kelly88 Member

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    Thanks ... Does it require lots of work to change a loan from an investment loan to a normal loan? It's the only loan under our main residence now as the other non-deductable part is already paid off years ago. If it's illegal, we wouldn't want to do it as later on maybe the tax office will match the data with investment loan data from the banks ....
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    What you tell the bank is not relevant for income tax purposes such as deductibility of interest.
     
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  7. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    It's just a form normally, easy to do.

    There's no tax implications, and you can deduct as normal. The only difference is that if you change it you'll be getting a lower rate based on the fact you're telling the bank it's a loan for your home, when in fact the loan is for your investment.
     
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