refinancing

[rocket22]

Hi out there,
I currently have an IP worth 330k and owe 230k on interest only loan, my question is how can i the extra 100k equity out to put to my own mortgage?
any suggestions would be great.
Thanks

 

[Rolf Latham]

Hiya Rocket

Do u mean you want to refinance or top up the IP mortgage,and use that cash to reduce your PPOR mortgage ?

The only way I can see that happening without some sort of sale is what we call debt recycling which can involve a number of things including capitalising investment interest (and buying shares with an income component to accelerate the process)

ta
rolf

 

[marg4000]

Don't even think of it.

For a start the extra to pay off your mortgage will be a non-deductible debt, so you will be no better off. You will still have to pay the interest and won't get a tax deduction as you do with the interest on the IP loan.

Even worse is the fact that you will contaminate the deductible debt with the private use, which will be an accounting nightmare for as long as you hold the IP.
Marg

 

[rocket22]

Thanks Marg and Rolf,
Yes Rolf i was thinking of using the extra cash to pay off my PPOR but i knew there would some kind of tax implications regarding capital gains. I want to do a renovation/development/flip to generate some cash to reduce my debt on my PPOR so i might use the equity from investment to pay the deposit for this venture...any thoughts?

Thanks anyway

Rocket

 

[Rolf Latham]

that would be ok from a tax point of view , since its for investment use.

ta
rolf