Another LOC question

Discussion in 'Property Finance' started by Collector, 25th Sep, 2009.

  1. Collector

    Collector Member

    11th Dec, 2008
    We are preparing to purchase 2nd IP in the next month or 2.

    Looking at best method regarding LOC.

    We currently have a LOC which is maxed out - used to purchase IP1

    We will either be seeking a 2nd LOC linked to PPOR or the extend the LOC we have.

    Looking for pros & cons for both methods.
  2. investor2009

    investor2009 Member

    26th Aug, 2009
    Pull equity to a new account from you PPOR or IP-1(new LOC for deposit and/or negative cashflow funding for the new investment)
    Then, borrow the rest through another lender (preferably).

    Your records of expenses/loans will be clear from a tax perspective.

    Best to do things clearly as believe me it can get pretty darn messy at tax time, and I've done things relatively well too!

    From now on I will be doing things this way though and will have a LOC for non deductible and deductible (seperate accounts) I haven't used equity for non deductible stuff yet but will be soon enough.
  3. traveller

    traveller Member

    14th Feb, 2007
    Yes you should set up different accounts for the clarity at the tax time.

    Also from experience, i will always set up different loan accounts for different properties and then if required do a top up on those if required in case i am doing an improvement/capital expense on that specific property.

    As for doing loans with different lenders, i have generally done all my banking with one bank only which provides me with ease, simplicity, flexibility and also a good deal as my size of business increases with them. As a loan writer for a big bank i am finding this more common now than before.

    However make sure you keep cross collaterisation to a minimum so that you can move(or at least threaten to) to another bank if things go wrong.