Splitting new PPOR loan

Hi all,

I am in the process of withdrawing equity for a deposit on my PPOR

I am thinking to go IO with a 100% offset and then pay P and I equivalent with the extra going into offset account.

My mortgage broker is suggesting to splot the new loan both with veriable rates

Is there an advantage to a split loan ie instead of being $500000 its is set up

$150000
$350000

Is it better to offset against wholr $500000 amount or would say $1000 offset to $300000 achieve the same thing.

Would a split option also make it easier if I plan to use the capital growth gor a new deposit? Ie pay down one part of the split into an offset and then use this as.deposot for my next house?

I am sure this will avoid cross collaterisation

 

Split out any equity release you do, especially important if the funds will be used for a different purpose (eg investment). So you can track interest expenses come tax time and apportion what may be deductible.

 

The withdrawal for the PPOR won't be tax deductible, so make sure it is a separate loan. Otherwise tax time will be a nightmare.

Unless you have huge equity in an expensive IP, if you are borrowing $500K it sounds as if you are refinancing the entire loan. Make sure the IP refinance is for the exact amount outstanding on the IP, plus a separate loan for the equity withdrawal for your PPOR.

Before acting, check with your accountant. The mortgage broker is there to get the loan, and may not be qualified to offer tax compliance advice.

Don't get it wrong.
Marg

 

You need to split for tax reasons. see my tax tips on mixed loans.

 

Thanks @Rolf Latham @Terry_w @Marg4000 @Redom
All of your insights are invaluable