using a HL to fund a vehicle

guys
wondering, if anyone has borrowed a second loan on an investment property to fund a vehicle.
to be clear, the second loan is borrowed on an existing IP and the loan is separate and obvs not tax deductible.
anyone done this, and what kind of loan did you get, term and rate. presume it was PI.
else, if you dont go down this path, i guess a loan is borrowed on the vehicle instead
thanks

 

Yep, have done it. But I used my PPOR as security so it was a better interest rate. My loan was deductible as my vehicle is used for work.
Got a 30 year loan, PI. A paid it off in 3 years.. which is how often I switch vehicles.

 

Pretty standard to take equity out of your property to buy a car.

But it should be reccomended that you structure it so its paid out within the terms like a car loan.

 

Definitely a viable option if equity is evident and have done plenty of times. The equity release is often a good option when the car in question does not meet mainstream policy and therefore higher rates under asset finance (for instance an older exotic car).

Very commonly done along the lines of the quoted structure. A longer term (e.g. 30 years) will have a lower minimum monthly repayment than a car loan so less of an impact on future borrowing capacity which is often a concern for investors looking to purchase again during the short term. Can accelerate additional / early repayment under a variable split.

Please just note some lenders are better than others when it comes to releasing equity for this purpose.

 

Thanks all for responses.

Given the circumstances I’m just wondering what will the loan be classed as - investment loan against the IP even though it’s not an investment loan it’s purpose is to fund a car. Some clarity is needed.

Also. Given it’s not an investment loan. For tax purposes nothing is claimable I believe apart from the logbook method or the other method.

 

I’m not a broker, but perhaps they can classify the loan under OO rates. Best to just ring up the bank and see what they can do.

Agree, sounds like this doesn’t apply to you.
In that case, split the loan and make sure the extra amount is not added to your IP interest when you do your tax.

 

Second Rolf, debt consolidated a car loan to an investment property and recieved OO rates.