Another LOC question

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

  1. Collector

    Collector Member

    Joined:
    11th Dec, 2008
    Messages:
    545
    Location:
    Sydney
    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

    Joined:
    26th Aug, 2009
    Messages:
    1,337
    Location:
    Darwin!
    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

    Joined:
    14th Feb, 2007
    Messages:
    271
    Location:
    Melbourne
    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.

    -Daman.