New life - advice please

Hello all
I am after some advice and i am sure the mountains of wisdom posting on this forum will come to the party.

current situation.
smoking hot wife (34) and me (36) and two kids under 4.
PPOR inner city perth. Value $950k, outstanding P&I loan of $390k with Bank A.
Also have another 20% IO loan against the equity of PPOR for IP1.
IP1 in SE Qld. Remaining 80% of purchase price an IO loan with Bank B.

For lifestyle and health reasons, thinking of moving interstate (and soon before kids start full time schooling).

Option 1 - simply sell PPOR and buy house $300k and land $450k. Effectively reduce our 390k mortgage to around 200k. Keep IP1, transfer 20% loan against current PPOR to new PPOR (that can be done yeh?).

But logistically, how would I go about option 1?
Would i get a new loan from Bank C for 80% of land value first (360k), and use existing equity in Perth PPOR for remaining 20% (90k) with Bank A? And then, sell PPOR, pay out 390k loan for PPOR, pay out recently acquired new loans for the land, transfer IP1 20% loan to new PPOR (which is just land at this stage), and then use what profit is left (~100k) and new construction loan (200k) for the build?

Option2 would be to somehow keep our existing perth PPOR but convert to rental. could i change P&I loan to IO loan and refinance it at the 390k and it would be tax deductible? If I could, my plan would be to borrow to do the land purchase and build.

If there is any other information needed to answer my questions, feel free to ask.
 
Option2 would be to somehow keep our existing perth PPOR but convert to rental. could i change P&I loan to IO loan and refinance it at the 390k and it would be tax deductible? If I could, my plan would be to borrow to do the land purchase and build.

If there is any other information needed to answer my questions, feel free to ask.

Hiya BR
yes you can usually do a PI to IO conversion with most lenders.

Assuming that all the debt currently on the PPOR was for the PPOR purchase and there is no personal debt mixed up with that, the 390 would be deductible against the income received

ta
rolf
 
Option 1 - simply sell PPOR and buy house $300k and land $450k. Effectively reduce our 390k mortgage to around 200k. Keep IP1, transfer 20% loan against current PPOR to new PPOR (that can be done yeh?).

But logistically, how would I go about option 1?
Would i get a new loan from Bank C for 80% of land value first (360k), and use existing equity in Perth PPOR for remaining 20% (90k) with Bank A? And then, sell PPOR, pay out 390k loan for PPOR, pay out recently acquired new loans for the land, transfer IP1 20% loan to new PPOR (which is just land at this stage), and then use what profit is left (~100k) and new construction loan (200k) for the build?

A lot will depend on your serviceability, job prospects etc...........

The order is probably ok, the equity position looks ok too

ASsume for a moment u will build a new IP rather than a PPOR

the 20 % "transfer" wont be easy so as to preserve deductability, however I believe it may be doable, if done at the right time with either a PORTABILITY ( lots of restrictions and possible issues) or a dollar for dollar refinance once the new place is complete.

In any case, It would be worthwhile to speak to your bank or broker to get ducks lined up before you leave current employment.

ta
rolf
 
the 390 would be deductible against the income received
And try not to get caught up in this whole OMG I don't have high deductability and I'm not negatively geared thing.

If the house is really worth that much with a loan that small the rent you get from it should make it positively geared. That means you *earn* money. That's not a bad thing, really. You don't *need* to make a loss on an investment.

Or if you absolutely must have tax deductions in your new life, sell the old PPoR tax-free, and buy a new PPoR. Then go off buying IPs again :p
 
Preserving deductibility will be tricky unless there is a simultaneous settlement where you can just substitute security for the 20% loan.

If you sell the PPOR first then the lender will require the loan to be paid out.

One possible option is to try to keep a sum of money from the sale with the bank as a deposit and to use this to secure the loan temporarily.

Another option would be to buy the new PPOR first and then switch the security for the 20% loan over to this before selling the old PPOR.
 
Preserving deductibility will be tricky unless there is a simultaneous settlement where you can just substitute security for the 20% loan.

If you sell the PPOR first then the lender will require the loan to be paid out.

One possible option is to try to keep a sum of money from the sale with the bank as a deposit and to use this to secure the loan temporarily.

Another option would be to buy the new PPOR first and then switch the security for the 20% loan over to this before selling the old PPOR.

+1 above.

Putting all your energy into arranging simultaneous settlement may cost you more in the property negotiations than it saves you in future tax deductability.

Either buy the new prop first to arrange the switch and preserve it or sell and pay it out.

If you are closer to a cash purchase at the front end of a new deal then you can negotiate a better price.
 
What is the relevance of this?

nothing other than i love my wife and think she is hot :)

everyone, thanks for all the posts and information you didnt let me down!
i have a bit more to go on now and will weigh it all up/speak to a broker.

anyone else in late to this thread feel free to add your views.

cheers
 
What is the relevance of this?


Like the 85 year old guy in the joke who steps into the confessional and confesses to the priest that he slept with a 19 year old woman. When the priest finds out that he's not even Catholic, he asks "why are you telling me this?" And the old man proudly replies: "Hey, I'm 85 years old....I'm telling everyone!"

Need pics to validate claim. :cool:

I thought the same :D
 
I'd convince your wife to quit smoking. That will have some economic benefits.

I suppose if she was butt ugly you wouldn't share it with us.
 
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