Changing PPOR to IP plus using equity to finance new PPOR

Hi Everyone,

We currently owe $252K. House has been valued at $540K, so we are tapping equity and bank is topping up loan to $432K so we can use difference to put towards 20% ++ for new PPOR to avoid LMI on the new place. We currently have surplus of $35K which we will redraw to use as 5% deposit on new place if we place at auction.

We then want to use old PPOR as IP.

Is this the best way to restructure our loans? What part of the loan will be deductible (just the interest on the 252K right? - but then we will be repaying both P+I on the whole $432K)? Loan is currently on BW Loantracker so is good interest rate. I don't know if we can change it to IO without refinancing to IO, and if we do that and maybe access the equity through a LOC with higher rates whether that plus all the application fees outweigh the good interest rate.

Thank you!

Confused.
 
Hiya Claud

The best way without any fancy fiddles would be

Refinance the 252 to an Interest Only Loan. This amount will be deductible against the rent of the old PPOR, now New IP.

Take an additional SEPARATE loan to the 252 of 180 k secured ONLY on the old PPOR, That adds to 80 % of the value of 540.

Use the 180 as deposit and costs on the new place

BWA RT cant be topped up in any case,would need to be 2 new loans. And I believe that BWA has pulled the rate tracker or is about to, I will come back on that ( gone as of today)

In any case, I think youd probably need a smarter strcuture than this basic to use a debt recycle strategy, which will make up for any rate difference and then some

ta
rolf
 
Last edited:
Top