Bought land going to build new PPOR what to do now???

[brocky05]

Hi Everyone

I have finally purchased a block of land for my PPOR. I'm taking out a loan for the land and a construction loan for the new build. I currently have an investment property also. Please see below for all my current financials

IP bought in 2009 for $452,000 we currently owe $140,000 to the bank
currently returns approx $360 per week back to us. Currently pay back to the bank $780 a week ( I know way overpaying )

New land purchased today $165,000 new loan owe the full amount

Construction loan the build starts in April next year and estimated finish is October next year approx $285,000

I also have $30K sitting in my savings account doing didly squat

Going forward what is my best option now home loan is through commonwealth and I think the mortgage advisor said go for the wealth package. How should I distribute my money to each loan.

 

[Terry_w]

Keep all loans separate. Do not alter amounts or you will be in tax trouble.

 

[Blacky]

You are a bit late.

I presume that you have paid off the principal of the IP, and have no funds in an offset account.

The security of a loan is irrelevant for tax purposes. It is the usage of funds which the ATO look at.

Therefore you will end up with;
IP loan $140,000 (tax deductible).
PPOR loan $350,000
Cash $30,000

About all you can do is convert the IP loan into an IO loan and pay the minimum. Use the additional money to repay your PPOR loan. Put the $30,000 into the offset account against the PPOR.

It may almost be worthwhile considering doing a complete debt recycle and selling the IP, clearing the loan and you PPOR loan, then borrowing it all back an re-purchasing an IP.
This will depend largely on your personal circumstances, as there will be significant costs to do this (CGT, Stamp duty, etc etc etc). So it may or may not be worth while.

It also sounds like you are about to cross your IP with your PPOR. Probably not the best idea.

You need to speak with a mortgage broker and a good accountant.

Blacky

 

[brocky05]

Keep all loans separate. Do not alter amounts or you will be in tax trouble.

Well I have to stop paying $780 off the investment otherwise I cant afford to pay the other loans....

 

[Rolf Latham]

How should I distribute my money to each loan.

not cross collateralising would be a good start

You rarely get a benefit from that

Im assuming thats what is happenig here with a 165 land and 165 loan?

ta
rolf

 

[brocky05]

It also sounds like you are about to cross your IP with your PPOR. Probably not the best idea.

You need to speak with a mortgage broker and a good accountant.

Blacky[/QUOTE]

What do you mean by cross your ip with your PPOR.

 

[Terry_w]

Well I have to stop paying $780 off the investment otherwise I cant afford to pay the other loans....

hmm, not sure what this means. How did you qualify?

 

[Blacky]

It also sounds like you are about to cross your IP with your PPOR. Probably not the best idea.

You need to speak with a mortgage broker and a good accountant.

Blacky

What do you mean by cross your ip with your PPOR.[/QUOTE]

Are you are using your IP to secure the loan for your PPOR.

 

[brocky05]

What do you mean by cross your ip with your PPOR.

Are you are using your IP to secure the loan for your PPOR.[/QUOTE]

Hi I think this is what the CBA mortgage guy said. Is this bad what is the best approach.

 

[Rolf Latham]

Hi I think this is what the CBA mortgage guy said. Is this bad what is the best approach.

call or email TerryW that responded above.

He will be able to set it up the way that it should be for YOUR benefit, not the CBAs

ta
rolf