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Uncross-collateralizing my loan.

Discussion in 'Property Finance' started by e96anban, 28th Jul, 2016.

  1. e96anban

    e96anban Member

    Joined:
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    australia
    Hi guys,
    Can anyone advice on my loan which is currently crossed collateralized.

    PPOR - $550k
    IP - $450k

    Loan 1 PPOR - $253k
    Loan 2 IP - $440k

    As you can see the LVR for IP alone is very high to go on its own. How do i restructure my loan to uncross my loan as well as maintaining my current IP interest deduction.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Your LVR is about 69%, most of the equity being in your PPOR. Fairly easy to uncross. At a minimum the way to go about it would be:

    PPOR
    OO loan: $253k - same loan as before, an offset account on this loan would be handy
    INV loan: $80k - equity loan to cover the difference between loan 2 and 80% of IP value

    IP
    INV loan: $360k - reduce existing loan 2 to 80% of IP value

    There's still equity in your PPOR, so if you were planning to continue to build a portfolio, you might take this opportunity to release more equity in the PPOR than just $80k.
     
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  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Gold Coast
    on the assumption that your IP loan is variable ( v fixed) , and you have ok servicing,it should be simple as Pete Says.



    Ta

    rolf
     
  4. e96anban

    e96anban Member

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    australia
    Thanks guys. I am on variable.
    If i were to do this, would i still able to claim deduction on the INV loan which is linked to PPOR?
    What sort of proof do i need to show the accountant that this loan is part of the IP??? *Confused*
     
  5. albanga

    albanga Well-Known Member

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    The purpose of fund have not changed. They are both related to the IP.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If you do it properly you should be able to claim the interest. It is just a refinance with new security and the loan being split. You don't need to provide your accountant with any proof.

    See
    Loan Tip: Uncrossing Crossed Colleralised loans Loan Tip: Uncrossing Crossed Colleralised loans
     
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  7. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Can't see why not.

    Pete's outlined a good structure - and is an awesome broker. Instead of going down the DIY path it might be worthwhile getting a pro like him to sort it out for you.

    Cheers

    Jamie
     
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  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Perth WA
    Depending what your future plans are, as Pete suggested it could be a good time to access some extra equity. Get your broker to get a few valuations from different lenders - you may find that a desk top val comes in better than expected and can release more equity than you thought.

    Which lender are you currently with?
     
  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    If you provide your accountant with bank statements from previous lender as well as new lender they should be able to work it out along with brief summary of what you did and why.
     
  10. e96anban

    e96anban Member

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    australia
    Thanks guys for your help.
     
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