Refinancing to uncross Loans

[JPS25]

Hi

We have just paid off our home loan in full as the money had been sitting in the morgage crusher for the last year and we have other funds eleswhere as a buffer for our IP's. We did so as to free up more equity for our 3rd IP which we are in search of. Our 1st IP was crossed with our home loan and as it was taken as a 5 year IO loan has approx another 2 years to run. We are in the process of un tangling it by splitting the loan into 2 as a 5 yr IO followed by P & I

Our 2nd IP was split from the beginning 20/80

My question is when we do this what happens to the borrowing costs that are claimed over a 5 year period ?

Do we write off the remainder of the first 5 years and start afresh ?

Or are the new loan costs added into the original and claimed over the remainder of the original period ?

Any info would be great, I don't believe we have enough equity in the 1st IP yet to just do a separation without re doing the loans.

Thanks

JPS25

 

[Rolf Latham]

Hi JPS

Borrow costs are over 5 years OR the term of the loan if the loan is less than 5 years.

Id hope that you will never convert your home into an IP, and either live there for ever, or sell to upgrade ?

ta
rolf

 

[JPS25]

Hi Rolf

Have had our home loan for almost 12 years and paid it down as quickly as we could only paying minimum payments and using the morgage crusher once we started to invest late 2009. By then we had already used redraw once in 2004 to go back the Uk and had 15 k sitting in it again by the time we started to invest. So not worth ever turning it into an IP will live in it till we decide to sell. We will know better next time.

So the 2 years we have left of loan costs we will still be able to claim back plus the new loan costs but over 5 years is that right ?

Thanks

 

[Rolf Latham]

So the 2 years we have left of loan costs we will still be able to claim back plus the new loan costs but over 5 years is that right ?

Thanks

Im sure an accountant can confirm............

Obviously the primary purpose needs to be for investment use !

ta
rolf