How to access money without selling?

[eastside]

Is it in any way possible to get around this problem?
I have a property which is my primary residence which I have rented out the last 4 years and I have paid off $200,000 from the loan. As this property is too small for us to all live in together (it's a one bedder) I am now looking at buying another one (we are currently renting).
Is it in any way possible to redraw the equity from the original one bed unit to put into my new loan, and then keep the one bedder as an investment property, with a larger debt on it then now?
The reason I ask is that it seems to be generally accepted that one has to sell ones' properties in order to free up the money, and it means that then I have to look around again, and buy another one later on and pay stamp duty etc all over again. I have never gotten the FHBG or the stamp duty exemption, and haven't had any growth on this unit either, so am not really in a position to pay it all over again.
Is it possible to buy another property, keep it as an investment, move the money around in the loans thereby making the loan on the newer (larger) property smaller and then a year or so later move into it, and turn it into a primary residence and keep the original as an investment?
I understand that one cannot redraw from one's loan on an investment property in order to use it for one's own residence as then there is no longer a tax claim for the invetment property for the money that was withdrawn from the loan to use for a primary residence. Is this correct?

 

[Propertunity]

Is it in any way possible to redraw the equity from the original one bed unit to put into my new loan, and then keep the one bedder as an investment property, with a larger debt on it then now?

Yes, absolutely.

it seems to be generally accepted that one has to sell ones' properties in order to free up the money,

You may be right about being "generally accepted" - but most people are "generally" broke and I wouldn't be taking their advice. You can refinance with the same or a different lender to access a lot of that equity you have created by paying down principal.

Is it possible to buy another property, keep it as an investment,

Yes, absolutely

move the money around in the loans thereby making the loan on the newer (larger) property smaller and then a year or so later move into it, and turn it into a primary residence and keep the original as an investment?

You cannot really move the loan money around to get more tax ded. on a PPOR loan - but there are strategies to recycle debt to make more of it "good" or tax ded. debt. You need to have a long chat with a good Mortgage Broker about how to do this.

I understand that one cannot redraw from one's loan on an investment property in order to use it for one's own residence

No - you can do this.

as then there is no longer a tax claim for the invetment property for the money that was withdrawn from the loan to use for a primary residence. Is this correct?

Yes, the part of the loan taken from the IP to be used for the PPOR will not be a tax ded. But you can still do it.

 

[Rolf Latham]

Hiya

This a common challenge.............often where people have been poorly advised by bank managers or accounts, or by well meaning friends and relatives.

"Pay it off"...............the standard mantra for debt, without ever considering the soft date such as "what will u do with the place middle to longer term"

If those 200 k repayments were directed into an offset account rather than into the loan directly you would npt have this challenge.

But, it is what it is.

There are a few ways that you can get better gearing so you can get some of the equity to work in more tax effective ways.

All involve selling the property to a spouse, or to a unit trust, thus "regearing" the existing property. All methods do involve significant cost usually, but often when u do the sums the numbers work out really well in the middle term.

ta
rolf

 

[Reality Cheque]

Hiya

This a common challenge.............often where people have been poorly advised by bank managers or accounts, or by well meaning friends and relatives.

ta
rolf

You can say that again. I was looking to do the same thing a while back and was told by my bank manager that not only was it impossible but also illegal. I wish that I had asked the question on this forum back then. I also need to say thank you Rolf for giving us the heads up recently when one of the big four banks were putting their fixed rates up. I was able to lock in straight away and the rates rose the next day. You knew what was going on even before my local branch did. Keep up the good work!


RC

 

[eggnog]

hey reality, which armidale you in. is it the one jyst north of tamworth

 

[Reality Cheque]

That's the one.

RC