Home Loan for Owner Occupied and Future Investment Loan Advice Needed

LN82 on 03/07/2019 - 08:59
Last edited 03/07/2019 - 10:01

Hi all,
I need a bit of a guidance in terms of my home loan and potential investment home loan for a new property. I know that i should be taking to a mortgage broker or an accountant, but i know many of you are financially savvy and may be able to offer some valuable advise.

I'm looking at switching my home loan provider to the one which will offer the best rate and an offset facility.
We have our savings kept in the offset account, and we are about 50k away from paying off our current home loan (i.e. borrowed home loan minus offset). Home valued at 600k.

We are also looking at purchasing an investment property (450k) with an estimated rental of 350 per week. I'm wondering what will be the best way to setup the investment loan, how much deposit to put down (from our offset) which will maximize our tax and other benefits. Should i refinance my home loan before we purchase the investment property or should i do it together? Also, is having two home loans under 1 bank a good idea?

Any advise is greatly appreciated.

Thanks

Financial Home Loan

Comments

  • oscargamer on 03/07/2019 - 09:03
    +1

    www.equityvision.com.au

    • N82 on 03/07/2019 - 16:00

      Thanks. I will check that out

  • silenthillrocks on 03/07/2019 - 09:46
    +1

    Wish you luck with your "Future Investment Load"

    • JIMB0 on 04/07/2019 - 08:47

      I hope they get some good "advise".

  • SydneyMoney on 03/07/2019 - 09:51
    +2

    Speak to a professional adviser (mortgage broker and/or accountant) - you have about 10 questions in there.

  • mbck on 03/07/2019 - 10:10
    +2

    Bet on black and you'll be fine. Unless it lands on red. But that won't happen

    • oscargamer on 03/07/2019 - 15:20

      What if it lands on the green zero ?

  • [Deactivated] on 03/07/2019 - 10:30
    +2

    Question: the best way to setup the investment loan, how much deposit to put down (from our offset) which will maximize our tax and other benefits.

    I would use your house as security and borrow 100% to purchase IP. Use a deposit bond (mortgage brokers normally sell these) to pay the initial 10% deposit to the real estate agent.

    Think long and hard about what you are about to do. In the current climate and on your figures, the IP will be negatively geared (costing you money). Investing to make a loss only works with good capital gains.

    Depending on your age and income, superannuation and its generous taxation structure may be another option.

    • N82 on 03/07/2019 - 16:02

      Thanks. I will look into this.

  • Some Guy on 03/07/2019 - 10:35
    +1

    There's not a lot of incentive for a lender to take on your current loan (PPoR?) so taking it together with a new investment loan will to a new lender will make it more attractive (to the new lender). Given that you're close to paying off your current loan, it may not be worth moving it though. But assuming that you'll be using your savings to fund the IP, which means your balance (and interest payable) will go up, so maybe it will be worth it.

    You should put down the bare minimum on your investment loan to avoid LMI and make sure you have all your savings in the offset of the non-deductible asset.

    • N82 on 03/07/2019 - 16:06

      Thanks. That is exactly what i planned to do.

  • mortgagebroker on 03/07/2019 - 10:39
    +4

    You need to sit down with a good mortgage broker or financial planner as everything has its pros and cons.

    If you want to maximise your tax deductibility you will cross-collateralise the properties and borrow the full 450k plus costs using the equity of the existing property. Then you can claim on the full 450k + costs.

    Tip: go see an expert.

    • N82 on 03/07/2019 - 16:03

      Thanks. Definitely will be consulting an expert. The whole situation is a bit confusing for me at the moment.

    • Extreme on 04/07/2019 - 09:04
      +3

      You don’t need to and shouldn’t cross collaterise.

      Don’t trust all brokers. There are some absolute clowns out there.

      IMO the best way to structure the loan would be to take out an 80% loan on your investment property, then a 20%+costs loan for your owner occ property.

      The advantage in taking a loan split on your owner occ property to cover the deposit is that the interest on this loan would be tax deductible. If you withdraw from your offset to pay for the loan deposit, you would then be paying this interest on your existing owner occ loan which is for personal use and wouldn’t be tax deductible.

      • mortgagebroker on 04/07/2019 - 12:38

        OP - Re-read the above post a few times so you understand what you are doing. Many customers can get confused getting ther head around how this works.

        Above is the best and simplest way, cost-effective way to buy a property in your situation. Don't use saved funds in the offset.

  • loulou1 on 03/07/2019 - 11:51
    +2

    Have you done the sums on this? Borrowing $450,000 and only getting $350 a week doesn’t sound that great. You will be negative approximately $1,000 a month providing there are no vacancy periods without factoring in insurance, repairs and maintenance, real estate fees, rates, body corporate if applicable.

    • N82 on 03/07/2019 - 16:08

      I'm thinking of borrowing 360k (80%) the rest paid from the offset. But you are right about the negative.

      • Extreme on 04/07/2019 - 09:07
        +2

        Don’t use your offset funds for the deposit. Doing so means you’ll be paying interest on your owner occ home loan again. This interest won’t be tax deductible.

        You’d be far better off transferring the funds into your offset, paying down the loan, then ringing your bank are reborrowing it as a new loan split on that property. As the new split is considered new borrowing and its for investment purposes it will then be tax deductible.

        • N82 on 04/07/2019 - 16:50

          Great advice mate! Thanks

  • farknos on 04/07/2019 - 09:24

    why not clear your existing debt on your home loan and save a deposit for your potential invesment property purchase and there is a fair chance what ever property you look at purchasing will be worth less than now.

  • HeWhoKnows on 04/07/2019 - 09:38

    Speak to your accountant as we dont know your personal financial affairs

  • asmith43 on 04/07/2019 - 10:03
    +2

    OP, talk to a mortgage broker so your particular circumstances and objectives can be considered. The solution lies in some of the suggestions noted above (i.e. 80% loan against the investment property; or 100% investment loan secured by both properties to maximise your tax deductible interest) and will depend on your risk profile and objectives. And optimally an investment property is both Cash Positive (rent exceeds cash outgoings for interest, rates etc) and Negatively Geared for Tax once you also include the tax deductions for depreciation/building write-off. I am a Brisbane-based finance broker (and former tax accountant) if you'd like to discuss further.

    • Centstoadollar on 19/07/2019 - 16:23

      “Cash Positive (rent exceeds cash outgoings for interest, rates etc) and Negatively Geared”
      How do you do that? How do you get 100 for something which costs you 90 (so 10 cashflow positive) but make it negative geared?? The only possibility I’d imagine is using depreciation to increase tax claim.
      But of you do that then eventually when selling you pay cgt based on the deducted amount used as the base cost(not the purchase amount).

  • Gelato on 07/07/2019 - 20:47

    "Home valued at 600k" is this value current or historical? if its past dated and you think current value has gone up, then a refinance and increase your loan amount for the deposit of your investment home.

  • ExclusiveLoanSolutns on 28/07/2019 - 22:14

    Hi Alan

    Do not X collaterise. You can still structure to achieve same results without giving banks full control over your properties.
    It’s the structure that Banks love but not good for clients and takes away freedom of making a move down the track.

    Structuring the loan is critical not just for your short term but long term needs. I would say structure is more important then the rate and in long term it can actually end up costing clients more if they don’t setup loans and prioritise rate over structure and lender that offers flexibility.

    Do not use your cash to pay deposit for the IP. You can structure it to get 100% IP loan deductibility without XC. Speak to a Mortgage Broker.

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