I've been trying to follow the variety of threads whereby people want to change their PPOR into an IP. Their PPOR usually has a mortgage on it of some description.
Am I correct, based on what I have read, that if this is the intention then a LOC type loan is best suited for this purpose.
The idea that the LOC is as large as possible based on the property value, but the actual amount outstanding is whatever the previous mortgage amount was?
The idea being that if you make the PPOR a rental property you then "pull out" all of the funds available in the LOC (up to its limit) to go towards the next PPOR?
Given that an LOC is like an IO loan with a built-in offset account (to me at least, someone correct me if I'm wrong), does either loan type permit a higher LVR?
My next question then is if one refinances a PPOR from P&I to LOC and then pulls out funds later when the PPOR becomes and IP, is is legitimate to start claiming the interest on the LOC as a tax deduction for that IP?
Or is this irrelevant because you withdraw money from the LOC which was not for investment purposes (eg. to finance a new PPOR). Bit confused about that.
Thanks
Kevin.
Am I correct, based on what I have read, that if this is the intention then a LOC type loan is best suited for this purpose.
The idea that the LOC is as large as possible based on the property value, but the actual amount outstanding is whatever the previous mortgage amount was?
The idea being that if you make the PPOR a rental property you then "pull out" all of the funds available in the LOC (up to its limit) to go towards the next PPOR?
Given that an LOC is like an IO loan with a built-in offset account (to me at least, someone correct me if I'm wrong), does either loan type permit a higher LVR?
My next question then is if one refinances a PPOR from P&I to LOC and then pulls out funds later when the PPOR becomes and IP, is is legitimate to start claiming the interest on the LOC as a tax deduction for that IP?
Or is this irrelevant because you withdraw money from the LOC which was not for investment purposes (eg. to finance a new PPOR). Bit confused about that.
Thanks
Kevin.