Own IP and renting looking to buy ppor

[magpie season]

Hi , we are getting a bit sick of the 'characters' we live amongst renting cheaply , so looking to buy ppor .

Situation is own 1 IP worth about 340 k . Owe St George 150 k . Rate 5.49% after advantage.
50 k Redraw. 50 k Offset.
Need 420k to buy ppor.

Stg branch guy offered to consolidate redraw then 100 k top up loan against existing IP .So total on existing 200 k.
Then 320 k to buy ppor avoids LI.
Loans would move to 4 99% variable .
He assures me loans no x called.

Does that deal sound OK ? If not some alternative welcome thanks

 

[Chris B]

Hi , we are getting a bit sick of the 'characters' we live amongst renting cheaply , so looking to buy ppor .

Situation is own 1 IP worth about 340 k . Owe St George 150 k . Rate 5.49% after advantage.
50 k Redraw. 50 k Offset.
Need 420k to buy ppor.

Stg branch guy offered to consolidate redraw then 100 k top up loan against existing IP .So total on existing 200 k.
Then 320 k to buy ppor avoids LI.
Loans would move to 4 99% variable .
He assures me loans no x called.

Does that deal sound OK ? If not some alternative welcome thanks

Make sure you keep your deductible debt separate and I/O. The $50k redraw is no longer going to be considered deductible and you do not want to consolidate this into the existing $150k.

 

[magpie season]

Make sure you keep your deductible debt separate and I/O. The $50k redraw is no longer going to be considered deductible and you do not want to consolidate this into the existing $150k.

Thanks Chris,
Yes i should leave the redraw in place , perhaps use it for investment purposes later.

If i did need to use the redraw money for ppor how does the non deductable interest get sorted?
Is it every tax return i have to apportion interest to the redrawn funds manually myself? Does the bank work it out?

 

[Rolf Latham]

Sounds fine

We would rather do the Tony Robbins firewalk than use STG by choice......... : )

product in general is good, post credit and post settlement service can be flaky

If you are going down this track perhaps you could look at some debt recycle structure with your planner to get rid of that non ded debt more quickly.

the one saving grace of the Drag ons product mix is that they do have a global limit capacity which is useful for debt recycling

ta

rolf

 

[Aaron_C]

Sounds OK as long as the x-coll is not in place.

 

[Brady]

Has already been said across few posts here.

1. Ensure you don't have a mixed purpose loan, don't want to be having the accountant attempt to apportion debt... all sorts of issues especially if you repay some of the debt.
2. Ensure that you don't x-coll the loans, each loan should only have 1 security. Remembering purpose of the funds defines the deductabilty not what it's secured against.
3. Change all loans to IO and put all excess funds into offset, not into redraw
4. Look to 'debt recyle' - after loans changed to IO look to use the redraw for any expenses that relate to the property the loan was used for.
5. Push for a better rate if your borrowings is <80% LVR even <90% could push harder