Security for new PPOR and finance options

G

Gargamel

We are looking to buy a new PPOR and are exploring our finance options.

Would it be possible to use our unencumbered PPOR as security for a new loan without kicking in any extra cash? We also have funds in an offset but don’t want to use them towards the purchase price.

The tentative plan would involve us getting finance approval and purchasing a new home, then selling the current one and using the sale proceeds to reduce the new loan. Would also like to avoid expensive bridging finance rates or similar.

Any advice or comments would be appreciated.
 
Application would be as if you were buying a new property and renting out the existing and use the proposed rent to service the loan. servicing will somewhat dictate which lender you go with.
 
Ta, I assume having a claimed rental income would make for improved serviceability and borrowing power, as opposed to letting them know I planned to sell later?
 
Simply ask your bank to do a 25 % approx secured only to the old PPOR, anda separate secured 80% loan to the new IP (one day to be PPOR).

Once the old PPOR is sold, pay out the 25 % loan and park spare funds againts new 80 % loan or pay down case by case.

obviously dont take a fixed rate loan on either of these facilities

ta

rolf
 
Gargamel said:
Thanks. Last question on the 25% deposit loan, this will be a line of credit?
Click to expand...

doesnt need to be , depends on lender

many lenders allow redraw on their basic loans

I dont like LOCs for a couple of reasons , the main one being that many have "repayable on demand" clauses........though because this will be a short term facility for you, this wont matter so much.

ta
rolf
 
Gargamel said:
We are looking to buy a new PPOR and are exploring our finance options.

Would it be possible to use our unencumbered PPOR as security for a new loan without kicking in any extra cash? We also have funds in an offset but don’t want to use them towards the purchase price.

The tentative plan would involve us getting finance approval and purchasing a new home, then selling the current one and using the sale proceeds to reduce the new loan. Would also like to avoid expensive bridging finance rates or similar.

Any advice or comments would be appreciated.
Click to expand...

no problem at all. Borrow 80% against your current property and link the offset account to that loan and put the proceeds in there. Then borrow 80% against the new property as a separate application. As you mentioned if you are looking to sell the current property then you could borrow 25% only and when you sell it you could secure 25% debt against a term deposit until you have alternative security so you dont lose the tax deductibility of the debt.
 
No need for a bridging facility.

With a split loan upfront costs will be next to nothing if structured correctly.

Get your offset account set up on the new loan from day one so that when you sell the current PPOR you have flexibility to whether pay down the loan or stick the surplus funds in the offset account.
 
Rolf Latham said:
Simply ask your bank to do a 25 % approx secured only to the old PPOR, anda separate secured 80% loan to the new IP (one day to be PPOR).

Once the old PPOR is sold, pay out the 25 % loan and park spare funds againts new 80 % loan or pay down case by case.

obviously dont take a fixed rate loan on either of these facilities

ta

rolf
Click to expand...

Is it possible to have a single loan to purchase a new property using the old PPOR as security?
 
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