Loan Structure Advice Needed

[dan_89]

Hi all, looking for some advice on loan structuring. Will try explain as best I can;

IP:1

- Purchase price 2011 - $370k
- Current loan at $304k (80% LVR)
- Previous bank val came back at $380k in Jan 2014.
- Current market value - $440-$450k based on comparable sales and discussion with trusted local agent.


IP: 2

- Current PPOR while renovating
- Aiming to have completed by end of 2015 with hope of next val coming back around the $620-640k mark.
- Purchase price 2014 - $525k
- Current loan at $412k
- Current market value- $550-$580k based on comparable sales.
- $28k redraw + monthly savings available to fund reno's. (kitchen, 2 x bathrooms, new deck, paint etc etc.)

If I was to have IP:1 revalued and achieve figure of around $420K, (to my understanding bank vals can often be conservative in comparison to market value) would there be an option to push LVR back upto 80% (loan amount $336K) and bring pay the PPOR debt down as it is non deductible?

I am still undecided as to whether the property will remain PPOR or return to IP after renovations as I have plans to subdivide and build on the rear of block (STCA).

Fixed portion of loans is in locked in until approx mid next year.

I plan to discuss with my broker shortly but interested to get some alternate advice beforehand.

Cheers

 

[Terry_w]

HIf I was to have IP:1 revalued and achieve figure of around $420K, (to my understanding bank vals can often be conservative in comparison to market value) would there be an option to push LVR back upto 80% (loan amount $336K) and bring pay the PPOR debt down as it is non deductible?

Borrowing to extra to pay down your PPOR will not make the interest on the extra amount deductible.

It will create a mixed purpose loan and a mess so best not to do it.

Best to get tax advice before committing to any loan restructures too.

 

[Redom]

Hi all, looking for some advice on loan structuring. Will try explain as best I can;

IP:1

- Purchase price 2011 - $370k
- Current loan at $304k (80% LVR)
- Previous bank val came back at $380k in Jan 2014.
- Current market value - $440-$450k based on comparable sales and discussion with trusted local agent.


IP: 2

- Current PPOR while renovating
- Aiming to have completed by end of 2015 with hope of next val coming back around the $620-640k mark.
- Purchase price 2014 - $525k
- Current loan at $412k
- Current market value- $550-$580k based on comparable sales.
- $28k redraw + monthly savings available to fund reno's. (kitchen, 2 x bathrooms, new deck, paint etc etc.)

If I was to have IP:1 revalued and achieve figure of around $420K, (to my understanding bank vals can often be conservative in comparison to market value) would there be an option to push LVR back upto 80% (loan amount $336K) and bring pay the PPOR debt down as it is non deductible?

I am still undecided as to whether the property will remain PPOR or return to IP after renovations as I have plans to subdivide and build on the rear of block (STCA).

Fixed portion of loans is in locked in until approx mid next year.

I plan to discuss with my broker shortly but interested to get some alternate advice beforehand.

Cheers

Deductibility is based on purpose - taking out a new loan to pay down an existing PPOR loan won't reduce your non deductible debt, it'll just make it a mess as Terry mentioned.

If you re-borrow back up to 80% on your investment debt, best to use it for investment use or create another split loan if intended for private use (paying down PPOR is private).

From a finance perspective, valuer shop. Get all sorts of vals done (desktop, kerbside, full). You could get a great valuation and brokers are consistently seeing 10-20%+ differences in vals.

Cheers,
Redom