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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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    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 Well-Known Member 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
  9. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Perth
  10. e96anban

    e96anban Member

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    australia
    Thanks guys for your help.
     
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