getting equity out

If you own a single IP and you refinance and as part of that are able to access an extra 50k to still keep you at 80%, where is the best place to put this?
I have just read and heard different replies to this.
1 - Put it into the loan redraw until required then create new split.
2 - Crete a new split as part of the refinance and then have it in an offset for that account. Concern here is it may get spent more easily and also I did read that at some point the bank could close this? Doesn't sound right to me?
3 - Same as above but in redraw, again could the bank close this if it were not touched for say 6 months.
4 - Put it into main offset with personal funds and then advise accountant to proportion a percentage? I had also read this but in my limited wisdom this sounds like loan contamination?
1 - you could, but why not do it all at once?
2- This is what I would suggest, or a LOC. Bank can't/won't close it although they can call in a LOC.
3 - this is pretty much the same as 1 without the split. I'd suggest a split.
4 - Mixed funds would contaminate very quickly if it's your main transaction account. Worst idea of the 4.
 
1 - you could, but why not do it all at once?
2- This is what I would suggest, or a LOC. Bank can't/won't close it although they can call in a LOC.
3 - this is pretty much the same as 1 without the split. I'd suggest a split.
4 - Mixed funds would contaminate very quickly if it's your main transaction account. Worst idea of the 4.

Thanks Jess!
Number 2 is exactly what I thought as well but have just read some different responses over the years (Likely me just interpreting some of the wisdom incorrectly).

Regarding option 2 if you wanted an equity split (NOT LOC) what about in the scenario you wanted to refinance now but had no immediate plans to purchase an IP. Then say in 1 year you decide you want to but the market has moved and you get another valuation done and there is another 20k in equity. Is it easy for the lender to extract that and put it into the 30k split you created the year earlier?
Or is this when option 1 is more ideal, just leave it in redraw and then get the new split created in 1 years time?
 
What is the official term for this anyway? I never know what to refer to it as. Is it a cash out? Equity release? What's the official industry term?
 
Thanks Jess!
Number 2 is exactly what I thought as well but have just read some different responses over the years (Likely me just interpreting some of the wisdom incorrectly).

Regarding option 2 if you wanted an equity split (NOT LOC) what about in the scenario you wanted to refinance now but had no immediate plans to purchase an IP. Then say in 1 year you decide you want to but the market has moved and you get another valuation done and there is another 20k in equity. Is it easy for the lender to extract that and put it into the 30k split you created the year earlier?
Or is this when option 1 is more ideal, just leave it in redraw and then get the new split created in 1 years time?

It's no hassle to top up the new split when the time comes.

Re official term, both work :)
 
It's no hassle to top up the new split when the time comes.

Re official term, both work :)

Thanks Jess, really appreciate the replies.
One last question though just to get my head around it properly :)

With option 1, say you get your property valued and it come in at 300k.
Your existing loan is 200k so you refinance the 200k plus the additional 40k of available equity and you stick it in redraw of that loan, so limit is 240k with 40k available.

1 year passes and you want to use that equity BUT property prices have dropped and it is now only worth 250k. The 40k is in the redraw but would the bank let you use it? Or would they require a reval and say "Sorry you cannot access that equity any longer?"
 
No, they wouldn't normally revalue to redraw equity.

It's conceivable that in a GFC type scenario they might say you can't access the funds sitting in redraw though - I know U-bank for example has this in their T&C's - so using an offset can make that one step further removed.
 
No, they wouldn't normally revalue to redraw equity.

It's conceivable that in a GFC type scenario they might say you can't access the funds sitting in redraw though - I know U-bank for example has this in their T&C's - so using an offset can make that one step further removed.

Thanks Jess! :)
Can I push the friendship with one final question, last one I promise :p
IF you did do option 1 (I know its not the best option but just so I know all possibilities) and then you decide you want to purchase an IP and create the extra split.
Is this a very simple process? Can the Lenders do this immediately? And would they charge you? Or is this like a 30 day process and they will charge you $500 kind of thing.
 
It's an application to create a new loan account, so there are fees generally but maybe waived under package- depends on lender but any fees usually aren't too outrageous. Prob takes a week, or a month if it's ME bank :)
 
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