Refinancing Help - Complex Structure?

^ dont do that....your pricing from 5-6M and 2-3M is almost the same...give or take 0.05% -0.10% off the rate...which sounds like a lot but placing all your loans with one lender ( esp your business bank) will have the following issues that i can see

- Reduce equity amount
- very hard to "grow a portfolio and take out equity later"
- Even if it's a BIg 4 bank...at $3M+ that lenders DUA is gonna be very weak
- Default risk
- Poor planning

You really need to sit down with your broker and plan it out..you have close to $240k in equity...+ given your portfolio size + self employed ...your probably planning on buying more or growing your business...both requires absolute pat down good planning.

1. Keep all Loans uncross
2. Only PPOR needs offset
3. Spread the loan to 3 lenders...use the hardiest one first OR the one with the lowest equity and move out from there.
4. Keep a good spread of " back end lender with good servicing last "
5. Understand your goal for the next 3-5 years.

Very interesting,
What is meant by DUA????
1. All loans are uncross so I will keep it that way, thanks.
2. Why? What if the total loan is drawn down for living not investing? Can this one loan be split into 2 accounts? 1 for private 1 for investing if required? Can I reshuffle the amounts between them?
I think I need additional offset then for the existing ALL IPs, so the interest is not mixed, personal with IP?
The only offsets I have so far are in SMSF, nothing under private investments.
3. This concept is new to me I would hope the broker would know the process and how to proceed?
4. As per 3 above.
5. The goal is to refinance, pulling out maximum equity, clean up the portfolio later in the year with trust IPs, then either place funds in offset or reinvest into 1 IP only under different entity (unsure if SMSF or privately, to lessen the work load).
I have refinanced in the past on two main occasions, one for pulling out 1 security and refinancing it to 80%LVR, and when the 10 year IO loans were converted to P&I, so again to have them as IO.
I have never pulled out equity and used it to buy another IP always providing at least 25% (20% deposit 5% fees).
So I am conservative and frustrated wether it will be done correctly?:confused:
 
Very interesting,
What is meant by DUA????
1. All loans are uncross so I will keep it that way, thanks.
2. Why? What if the total loan is drawn down for living not investing? Can this one loan be split into 2 accounts? 1 for private 1 for investing if required? Can I reshuffle the amounts between them?
I think I need additional offset then for the existing ALL IPs, so the interest is not mixed, personal with IP?
The only offsets I have so far are in SMSF, nothing under private investments.
3. This concept is new to me I would hope the broker would know the process and how to proceed?
4. As per 3 above.
5. The goal is to refinance, pulling out maximum equity, clean up the portfolio later in the year with trust IPs, then either place funds in offset or reinvest into 1 IP only under different entity (unsure if SMSF or privately, to lessen the work load).
I have refinanced in the past on two main occasions, one for pulling out 1 security and refinancing it to 80%LVR, and when the 10 year IO loans were converted to P&I, so again to have them as IO.
I have never pulled out equity and used it to buy another IP always providing at least 25% (20% deposit 5% fees).
So I am conservative and frustrated wether it will be done correctly?:confused:

Pulling out equity from existing properties and using them as a deposit for the purchase of another (instead of using cash) is item 1 in finance strategies 101.

Depending on how aggressive you are versus how much equity you have - you may need to consider going for a LMI loan. Not sure what your profession is but some are eligible for 90% no LMI loans.

CBA have quite a conservative borrowing capacity so I hope you plan ahead. By this don't finance the next purchase with CBA only to find out later that you have hit your limit and need to start moving loans away from CBA due to the inability to do equity releases. You will also require to use lenders that are easy to use for equity release as some are a real pain.
 
Very interesting,
What is meant by DUA????
1. All loans are uncross so I will keep it that way, thanks.
2. Why? What if the total loan is drawn down for living not investing? Can this one loan be split into 2 accounts? 1 for private 1 for investing if required? Can I reshuffle the amounts between them?
I think I need additional offset then for the existing ALL IPs, so the interest is not mixed, personal with IP?
The only offsets I have so far are in SMSF, nothing under private investments.
3. This concept is new to me I would hope the broker would know the process and how to proceed?
4. As per 3 above.
5. The goal is to refinance, pulling out maximum equity, clean up the portfolio later in the year with trust IPs, then either place funds in offset or reinvest into 1 IP only under different entity (unsure if SMSF or privately, to lessen the work load).
I have refinanced in the past on two main occasions, one for pulling out 1 security and refinancing it to 80%LVR, and when the 10 year IO loans were converted to P&I, so again to have them as IO.
I have never pulled out equity and used it to buy another IP always providing at least 25% (20% deposit 5% fees).
So I am conservative and frustrated wether it will be done correctly?:confused:

Mick's suggestion is good. But what you are proposing is potentially dangerous. I advice clients not to borrow and park in an offset as you are weaking the connection between later incurring interest and also it is much easier to mix borrowed and non borrowed funds. I suggest a LOC is better for tax reasons or an IO loan which you can temporarily draw down into a clean account and then pay back into the loan (separate split of course) to be borrowed when invested.

If you will be borrowing for private expenses interest won't be deductible so this is less of an interest.
 
Mick's suggestion is good. But what you are proposing is potentially dangerous. I advice clients not to borrow and park in an offset as you are weaking the connection between later incurring interest and also it is much easier to mix borrowed and non borrowed funds. I suggest a LOC is better for tax reasons or an IO loan which you can temporarily draw down into a clean account and then pay back into the loan (separate split of course) to be borrowed when invested.

If you will be borrowing for private expenses interest won't be deductible so this is less of an interest.

Thank you Terry,

This is what I am unsure off as I do not need the funds. As you can tell I have never DUA, as I always gave 25% deposit (20% for deposit 5% for fee costs).
Now that was my dilemma, if say I get $1 mill or more how do I manage it for further investment and how do I manage it for private spending (if the need arose????).
Basically the way you are suggesting I would create separate bank accounts, draw the required money there, whether for another IP or shares or whether to draw down equity for lifestyle. That way I am able to control not mixing the private expense interest, am I correct in this? Basically it would be an exercise in shuffling?
Yes you are right, in addition I would not use the offset against that loan, it would be used for the other personal IPs to put money in that generate surplus.
Gee I am learning so much, thank you!
 
I would suggest you don't draw down into an offset account as you could end up with tax problems. Short term is ok as long as it is repaid back into the loan - it could even be mixed with other savings too.

If you have say $500,000 available borrowable equity then why not consider something like
$100,000 IO/LOC loans x 5.

That way they are split from the start and you can use one per property purchase and perhaps keep one for possible private use. No need to split later.
 
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