We're having problem with the bank regarding a display home (as an IP). They would accept our application only if we pay 20% of the loan as the display home can't be covered by LMI. Our broker worked around the problem and came up with a solution which the bank accepted. This was explained to us yesterday and we agreed. However, I was just wondering about some issues this morning (gonna confirm broker later this morning):
Scenario 1:
a. PPOR loan
b. 485K loan (9K LMI included), 45K deposit
Scenario 2:
a. PPOR loan + 85K
b. 400K loan, 45K deposit
Questions:
1. In scenario 2, if we still pay a 45K deposit, shouldn't our 85K loan decrease by 9K (to 76K) as there's no more LMI?
2. What are the implications on tax? One thing I can think of at the moment is that we cannot claim LMI as an expense.
3. Is scenario 2 same as using equity on PPOR loan?
Thanks in advance.
Scenario 1:
a. PPOR loan
b. 485K loan (9K LMI included), 45K deposit
Scenario 2:
a. PPOR loan + 85K
b. 400K loan, 45K deposit
Questions:
1. In scenario 2, if we still pay a 45K deposit, shouldn't our 85K loan decrease by 9K (to 76K) as there's no more LMI?
2. What are the implications on tax? One thing I can think of at the moment is that we cannot claim LMI as an expense.
3. Is scenario 2 same as using equity on PPOR loan?
Thanks in advance.