PPOR Refinance / Prep for IP1

Hi everyone,

Absolute goldmine here so thank you for everything you've done for me already.

I do however have a scenario to run by the group to see if I'm pointed in the right direction.

The Details
  • PPOR (joint ownership with my wife) 360k debt (30k available redraw).
  • 2011 Bank valuation of 560k (I think we redrew an amount for a kitchen reno which triggered this - is this going to be a problem?)
  • Cash is at 30k.
  • We have the benefit of a discount arrangement for 250k @ (Current SVR - 1%) and the remainder (110k) is current SVR of 5.4%. Lender is CUA.
  • Gross incomes of 120k/100k.

Background / Intent
We are very likely going to move into a school catchment area in the next 3 years to leverage the educational benefits a particular state school provides for our 2 dependents. It comes at a much reduced cost when compared to other schools my wife has told me about.

The intent is to:

  1. Retain and refinance, with a slightly better product, our current PPOR (although Point 3 and this thread might influence this);
  2. Buy an IP (500-550k), within the catchment area, with a view to either moving into that or simply renting, in the catchment area, when the time comes and having both working as investment properties; and
  3. Understand the best approach to loan structuring of current PPOR to maximise our deductibility opportunities later (Sell to Spouse / Debt recycling / Or just sell it / or anything else).
  4. Engage an appropriate person or people to help get ourselves in order.

What we've done so far
Spoken with the Lender with a view to getting on their new 4.65% product.
They've suggested we:
  • Draw out the 30k from the mortgage (does this 'taint' the product as I've read on here?);
  • Keep the 250k on the SVR product (4.4%); and
  • 'Refinance' the remainder (110k + 30k redrawn) plus an additional 50k (required to access the 4.65% product).
That will leave us with:
  • 250k in one product (untouched);
  • 190k in second product (new mortgage); and
  • 60k offset account.

My Questions
Assuming the direction above is sound (suggestions welcome) should I also consider the ownership structure before or as part of this finance change?
Which loan product should I put the offset account against? I'm not sure I even have a choice right now but if I do would it be against the higher rate or higher debt account? My crude calcs show I'm very slighty ahead with it against the 190k account.
Does this restructuring unnecessarily complicate our lives later when the property changes from our PPOR to an IP? Happy to 'Do nothing' for now if that yields better long term outcomes.
 
Hiya

Welcome

I can see some mixed purpose loan issues coming out of the below

Dont let product/pricing constraints get in the way of the "right" thing.

If you are prepping to buy a 550 k place u will need 110 k + 20 k prox so 130 k as a discrete loan split on the PPOR, and use that for deposit and costs. You probably dont have quite that equity, so youd likley need LMI on the new purchase OR, try a valuer shop on the PPOR, with the reno and pick up in the market and you may get a 630 to 650 val

Unless you are on a staff rate I doubt that a 4.40 v rate is achievable in any case

ta
rolf
 
Does this restructuring unnecessarily complicate our lives later when the property changes from our PPOR to an IP? Happy to 'Do nothing' for now if that yields better long term outcomes.

One thing u do need to be aware of is that once you turn your place into a PPOR, the existing and remnant debt needs to be correctly structured.

A question........ have you ever salary credited any of the loans or used redraw from the loans.

Pls dont take tax advice from a bank or broker, get specific advice on what you propose

ta
rolf
 
Unless you are on a staff rate I doubt that a 4.40 v rate is achievable in any case
Is there a reason to stay with CUA?

Thanks guys. It is a staff discount so if employment ever ended there we'd be reviewing our situation again I expect.

A question........ have you ever salary credited any of the loans or used redraw from the loans.
The only redraw (2011) was for a kitchen reno on our current PPOR. No salary crediting or other redraws have occurred.

Dont let product/pricing constraints get in the way of the "right" thing.
Understood.
 
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