Loan Structure

[argentina]

I re-financed by PPR and IP loans in order to get a better interest rate and separate security. Previously investment loans were secured against my PPR. I went through an Aussie Broker. The process was less than satisfactory. Lengthy delays, incorrect names on contracts, incorrect interest rates on contracts etc. Overall took 4 months ! I think I was just relieved when it was all finalised and I am happy to have sorted out the security.

However, in the process the loans were split into what I now consider to be rather unsatisfactory. I had initially indicated what I wanted but then they contacted me to say because of the security they had to split it differently.

5 Loans in total for 3 IP's and 1 PPR includes:

1 x PPR - no problem with this
1 x PPR top-up - no problem with this

1 loan which covers 100% of (IP1) and 30% of another (IP2)
1 loan which covers 70% of (IP2) and 9% (IP3) and 1% of PPR !
1 loan which covers 91% (IP3)

I can do the calculations to work out the interest although it is complicated. I keep excellent spreadsheets with my workings.
But I still have this ridiculous 1% PPR (around $650) sitting within one of my investment loans.
I know it is minute but I also know it is problematic from a tax perspective and it worries me.

Would welcome your thoughts

 

[Terry_w]

Why did you agree that?

Because it is a split loan you won't be able to repay that 1% PPOR separately to the 99% investment. ie you cannot just deposit $650 into that account and have it all go to the PPOR portion - only $6.50 would go off the PPOR portion.

But being such a small amount any interest would be insignificant.

 

[Rolf Latham]

I re-financed by PPR and IP loans in order to get a better interest rate and separate security. Previously investment loans were secured against my PPR. I went through an Aussie Broker. The process was less than satisfactory. Lengthy delays, incorrect names on contracts, incorrect interest rates on contracts etc. Overall took 4 months ! I think I was just relieved when it was all finalised and I am happy to have sorted out the security.

However, in the process the loans were split into what I now consider to be rather unsatisfactory. I had initially indicated what I wanted but then they contacted me to say because of the security they had to split it differently.

5 Loans in total for 3 IP's and 1 PPR includes:

1 x PPR - no problem with this
1 x PPR top-up - no problem with this

1 loan which covers 100% of (IP1) and 30% of another (IP2)
1 loan which covers 70% of (IP2) and 9% (IP3) and 1% of PPR !
1 loan which covers 91% (IP3)

I can do the calculations to work out the interest although it is complicated. I keep excellent spreadsheets with my workings.
But I still have this ridiculous 1% PPR (around $650) sitting within one of my investment loans.
I know it is minute but I also know it is problematic from a tax perspective and it worries me.

Would welcome your thoughts

Have the splits fixed ?

Unless you are on fixed,>80 % LVR or a hard case, have the mess sorted out.............it should be doable

Your issue seems to be 2 fold and caused from 2 diff areas.

1. incorrect data provided by the lender in populating their docs
2. Structure provided by the broker, and this appears to be the real drag vs the inconvenience of the other stuff.



ta
rolf

 

[Aaron_C]

I think what the other guys haven't said is that your loans appear cross collateralised. Why?

 

[boomtown]

I re-financed by PPR and IP loans in order to get a better interest rate and separate security.

As above, you have not achieved separate security. You will need to refi again to separate them all out.

And you definitely should not be cross-contaminating PPOR and IP loans.

 

[Bigtone]

was this with Bank SA?

 

[argentina]

I think what the other guys haven't said is that your loans appear cross collateralised. Why?

Not cross collateralised against the PPOR which was the important thing for me.

The set-up of the loans all had to do with LVR and avoiding mortgage insurance. Refinancing is just not an option now. 2 of the IP's have dropped in price (a combined loss of 25%. They would probably insist on taking security again over my PPOR.

 

[argentina]

Have the splits fixed ?

Unless you are on fixed,>80 % LVR or a hard case, have the mess sorted out.............it should be doable

Your issue seems to be 2 fold and caused from 2 diff areas.

1. incorrect data provided by the lender in populating their docs
2. Structure provided by the broker, and this appears to be the real drag vs the inconvenience of the other stuff.



ta
rolf

Thanks. that's what I am working on. getting the splits re-worked. All variable rates so no fixed interest. It was a really stressful time when I did the re-finance with a family members health issue so I wasn't on the ball as much as I should have been.

 

[boomtown]

Not cross collateralised against the PPOR which was the important thing for me.

You said that 1 loan covers 2 IPs and 1 percent of the PPOR. Sure sounds like cross collateralisation to me.

 

[Peter_Tersteeg]

You said that 1 loan covers 2 IPs and 1 percent of the PPOR. Sure sounds like cross collateralisation to me.

Reads to me like he's talking about the purpose of the loans, not necessarily the security to each loan.

 

[Rolf Latham]

Thanks. that's what I am working on. getting the splits re-worked. All variable rates so no fixed interest. It was a really stressful time when I did the re-finance with a family members health issue so I wasn't on the ball as much as I should have been.

if its fixable, dont stress then............I know, easy to say

ta
rolf