Funding of 2nd IP from 1st IP loan

Hi all,

looking to buy my 2nd IP. I have enough redraw in the loan on my 1st IP to cover the deposit and then I intend to refinance both loans such that there is 80% LVR on the second IP (ie by releasing further equity in the 1st IP).

Can anyone see any problems with this? (given that the funds redrawn are being used for investment purposes also)

I realise I should have had the funds sitting in an offset account rather than being ahead of schedule on the repayments but that is history now.
 
Ensure that the redraw amount is on a sub account. The interest deduction for that loan will be applied to IP2 and needs to be capable of being ascertained rather then blended with the original IP1 loan. This avoids apportionment and other blended loan concerns.
 
less of an issue if the loans are long term IO, since you can run a simple spreadsheet.

Could become problematic if PI

If your IP has some increased equity, you may be able to "lock nut" that while doing your split out


ta
rolf
 
I realise I should have had the funds sitting in an offset account rather than being ahead of schedule on the repayments but that is history now.

This is something you shouldn't do unless you have no private debt and don't intend to buy private items such as a PPOR.

Pay the minimum and divert funds to non deductible debt.
 
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