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Thanks Rob. However, I wasn't advocating the use of the offset account. Just borrowing with a standard loan. I think any LMI incurred on a new loan split which would be used solely for the investment property deposit and cost should be deductible under s25.25...

I think if the new loan was set up near the time of the purchase of the second property and the purpose was entirely for the investment then the LMI should be deductible as it would all relate to the new property. Rob, any thoughts?

Rolf, What about this: Set up a LOC or a new facility with redraw on the existing loan up to 90% LVR. When the new property is found borrow the deposit from this new loan.

I think you made the right choice!

Here is a made up example: A: $300,000 property B: $300,000 property Loan 1: existing 70% LVR = $210,00 Loan 2: new purchse, need to borrow $320,000 Total loans = $530,000 total Value = $600,000 LVR = 88% ---- Normally, I would do it like this: Property B. Take 90% LVR =...

Aaron, Serious question: how could cross coll save LMI in this case?

I would have some concerns with you plan. - You would be incurring the expense well before contracting the investment purchase. - You would be borrowing to place the money in a savings account. This doesnt mean it is not possible though.