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Top up or new loan split

Discussion in 'Property Finance' started by almostthere, 13th Aug, 2015.

  1. almostthere

    almostthere Active Member

    Joined:
    22nd Jun, 2015
    Posts:
    29
    Location:
    Sydney
    Hello everyone,

    I am in the following situation at the moment (figures are imaginary) :

    Loan Amount Security Purpose Type
    1 $400,000 IP1 Investments Primary
    2 $30,000 IP1 Non Deductible Equity Release
    3 $700,000 PPOR Non Deductible Primary
    4 $50,000 IP1 Non Deductible Equity Release

    Loan 1-3 are already setup with it's own individual offset account.
    Now, I am in the process of setting up Loan 4.
    Should I set it up by topping up Loan 2 or create a new split (Loan 4) ? If I split, this will cost $10 extra pm in account keeping fees.

    I plan to purchase an investment property later down the line at which times I would have accumulated around $50k savings..I would want to use the savings to pay the existing equity release loan (non deductible) and redraw for investment purpose to maximize my deductions.

    I hope I have made myself clear :)
    Thanks in advance.
     
  2. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

    Joined:
    18th Jun, 2015
    Posts:
    14,028
    Location:
    Remote
    No you should not add to an existing loan = mixed purpose loan and it would create issues if you ever rented out the main residence. You will be using loan 4 to refinance loan 2 so keep them separate.
     
  3. almostthere

    almostthere Active Member

    Joined:
    22nd Jun, 2015
    Posts:
    29
    Location:
    Sydney
    Thanks Terry as always.