Help required for old cheese (mother-in-law)

My old cheese is a great lady, and I'd like to help her out of a spot. She lives in Brisbane with her son. [Aside: We are relocating to Brisbane and we plan to all live together in a big rental and split the costs (--scary huh)]

She has about 60k equity in her PPOR and has it on the market for sale ($150k) hoping to settle within the month. Loan is with Westpac.

She also has an IP she would like to keep (currently where the son lives). It was bought 6 months ago with a loan for $90k (120% finance with xcoll from PPOR) and it was an absolute tip. Some extensive renovations later it is worth about $140k (but not yet revalued by bank) - nice! Apparently she has a Westpac loan on this that is variable for one year, then fixed for 3, then drops back to variable??? (She's not really sure... Westpac just sold this concept to her). Breakage costs on this might be high.

I'm thinking she should:

1. Sell the PPOR. Rent out the IP. Get Westpac to revalue the IP before settlement on her PPOR.
2. At settlement: She receives net settlement monies of 60k. She takes another $22k out of IP so it is now at 80% LVR based on the new valutaion (or whatever she can get to maximise funds available).
3. Put settlement monies and other funds (total $82k) in offset account linked to the same IP, until she decides what to do with it.

So basically, she has sold the PPOR and tipped the funds recieved into the IP (via offset) to reduce the interest (or earn 6% after tax -- whatever way you look at it) but still has ready access to those funds if required.

The problem is:
1. I'm not sure a refinance is possible on that weird Westpac loan.
2. If it is, why not just pay down the loan and redraw later if she needs the funds?
3. I'm not 100% positive about the issues involved with xcoll.
4. I don't know any mortgage brokers in South Brisbane, let alone a good one! Can anyone suggest someone I might talk to when I get up there?

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I would suggest clarifying the loan product situation before going further.

Loan product sounds odd, but then weirder things have happened.

I doubt that she would be variable now, thence fixed because foxed at what rate today, yesterdays, in a years time ?


After some clarification... the IP loan is fixed for one year (restricted to <20% repayment on principle) and then switches to variable. The loan is currently only 4 mo old. Breakage costs quoted as $800.
Do offset accounts work on fixed loans? Hmmmm.... what to do?
I have a fixed loan with Credit Union Australia with an offset account linked to it. So the concept is theoretically feasible.
Good luck with your implementation.

Double up on PPOR

<<New Flash>>

My mother-in-law has been told by her accountant that she can offload the IP without any tax implications. So she now wants to sell both properties ASAP to release the equity and take advantage of a very liquid market in south Brisbane - and she is of course happy to pay the penalty for breaking the honeymoon rate and releasing the mortgage on the IP loan.

Apparently it is possible to double up on PPOR for up to 6 months. So the accountant says she can sell both as a PPOR so long as she legitimately changes her mailing address, address on electoral role etc.

If this is true, taken to the extreme, is it possible to rent somewhere and buy, renovate, sell other properties within 6 months and claim them as your PPOR???