Re-financing - does loan structure stay the same?

[younginvestors]

I have a quick question about re-financing if anyone could assist?

Here's the scenario - if I have a PPOR Mortgage of $400k, and an Equity Loan for $50k secured by that PPOR (I/O and tax deductible). The PPOR is valued at $650k.

Q1) If I were to re-finance that PPOR Mortgage & Equity Loan to another lender I would need a mortgage for $450k. Does the re-structure with the new lender maintain the the same two loans (i.e. $400k + $50k) ?

Q2) If I were to re-finance to a LOC, would I end up with a Mortgage of $400k, and a LOC of $120k (of which $50k would be drawn down leaving $70k) - is this correct?

Thanks in advance.

 

[tobe]

When you re-finance, the new lender will need to pay out the old lender, in this case $450k. You can set up the new loan in the same structure as the old, or a new one. Hopefully your broker or banker will explain this when you put in the application.

 

[Rolf Latham]

Hiya

Id describe option 1 as a refinance, and option 2 as a refinance with equity pull for something.

If the purpose for the equity pull, and the oriignal 50 k LOC is different for tax purposes, then I ould split the loans into a 50 and 70 k to make deductbility easier to manage

 

[younginvestors]

Thanks Guys...I presume there is something to stop refiancing to a $100k PPOR mortgage and $350k I/O loan ?

 

[Peter_Tersteeg]

Thanks Guys...I presume there is something to stop refiancing to a $100k PPOR mortgage and $350k I/O loan ?

Subject to affordability and a few other things, you could potentially refinance your existing PPOR to 90% (95% with a few lenders) of it's current value.

Borrowing a total of $450k against a house worth $650k is definitely possible.

 

[Rolf Latham]

Hiya Young

U can have it ALL as IO

But the deductible portion varies depending on what the purpose actually is

ta
rolf