Unsure how to structure finance

[Grey man]

Current situation:
Have purchased one IP using loan with loans.com.au for 80% LVR.

Borrowed remaining 20% + closing costs (~$50,000) with Macquarie using my PPOR as security, which I owned outright. PPOR is worth $300,000 and I borrowed $150,000, then immediately put the difference into offset account with Macquarie. So am claiming interest from both loans against the investment property.

I would like to purchase at least another two IPs in the near future (and more in the future).
Possible financial structures:
a) Borrow additional money from loans.com using each individual property as security and use remaining $100,000 from Macquarie towards deposits. Would Macquarie let me do that? Do I need to tell them?
b) Use different lender/s for two new loans.
c) Revalue the investment property (purchased for $215,000, now worth $270,000) and borrow against that value, to pay off Macquarie loan then borrow 80% LVR of my PPOR to pay for one of the IPs.
d) Another structure I haven?t thought of yet.

My limiting factor will be servicing the loans, however this is a problem only on paper of financial institutions, because in reality, my partner earns a larger wage than mine, but we don?t want any property in her name to lower risk.

Would appreciate any advice offered as I am very new and have a lot to learn.

 

[Rolf Latham]

Hi GM

You can use the Macq money for whatever you want I expect.

Youd be well served to spend some time looking at serviceability of diff lenders and when to use what lender and why, and if a > 80 % lend works for you.

The use of Macq so early in the piece is not great

right now you have some goals to achieve, but the planning behind them looks to not be able to achieve anything like what you actually could.

ta

rolf

 

[Terry_w]

PPOR is worth $300,000 and I borrowed $150,000, then immediately put the difference into offset account with Macquarie.

Did you get tax advice on this?

 

[Grey man]

Did you get tax advice on this?

No. Is there a problem you see that I don't?

Just to be clear, I borrowed $150,000, when I needed $50,000. So immediately parked the difference in an offset account and am claiming the interest paid on the $50,000. This $50,000 covers deposit, stamp duty and renovations.

 

[Terry_w]

No. Is there a problem you see that I don't?

Just to be clear, I borrowed $150,000, when I needed $50,000. So immediately parked the difference in an offset account and am claiming the interest paid on the $50,000. This $50,000 covers deposit, stamp duty and renovations.

Yes a potential problem because you have borrowed to invest in a savings account.

Macquarie has a LOC option and free redraw..

 

[Grey man]

Hi GM

You can use the Macq money for whatever you want I expect.

Youd be well served to spend some time looking at serviceability of diff lenders and when to use what lender and why, and if a > 80 % lend works for you.

The use of Macq so early in the piece is not great

right now you have some goals to achieve, but the planning behind them looks to not be able to achieve anything like what you actually could.

ta

rolf

Thanks for prompt reply Rolf.

Is Macq not great to use early because they are a generous lender?

Also, how do you suggest I easily research serviceability of different lenders? Making enquiries with each lender is obviously very time intensive.

Thanks again.

 

[Grey man]

Yes a potential problem because you have borrowed to invest in a savings account.

Macquarie has a LOC option and free redraw..

"you have borrowed to invest in a savings account." Sorry I still don't understand that. As I see it, I am claiming interest paid on $50,000 which is directly attributable to my IP?

 

[Terry_w]

"you have borrowed to invest in a savings account." Sorry I still don't understand that. As I see it, I am claiming interest paid on $50,000 which is directly attributable to my IP?

indirectly??

 

[Nem]

I think you need to use mortgage broker to structure your loans, you cannot check serviceability with each lender personally even if it wasnt time demanding, it would surely damage your credit file from my understanding

 

[Peter_Tersteeg]

Yes a potential problem because you have borrowed to invest in a savings account.

Macquarie has a LOC option and free redraw..

The Macquarie variable loan is also reasonably transactable like a LOC. You don't need to go to the expense of a LOC to be able to achieve the same outcome. Payments can be made directly from redraw, it doesn't need to go through a separate transaction account.

Grey man, it's better to park the the money in the redraw of the loan rather than an offset account. Whilst there are circumstances where an offset account can work, it's risky because if you move any other money through that offset account, you are potentially mixing different types of money and contaminating the potential deductibility of the loan.

Thanks for prompt reply Rolf.

Is Macq not great to use early because they are a generous lender?

Also, how do you suggest I easily research serviceability of different lenders? Making enquiries with each lender is obviously very time intensive.

Generally not best to use the most generous lenders first, because you might want to keep them in reserve for when other less generous lenders start saying 'no'. I wouldn't recommend using the least generous lenders either. Managing which lenders to use when is very tricky, it needs to be designed with the longer term goals in mind if you're going to get the maximum borrowing outcome (if that's what you want).

Realistically you can't figure this out on your own. You need a broker who understands the nuances of different lender policy in this regard. Even then, very few brokers are up to the task. Dealing directly with the lenders doesn't work at all because they have no idea where their competitors can fit into a more comprehensive strategy.

Don't even bother trying to figure it out using lenders online calculators. These calculators are a sales tool and doesn't even properly match the lenders own policies. Highly unreliable.

 

[Michael_X]

I would suggest speaking to a broker on the forums and figuring out the best way forward. So important to get this right from the beginning, can save you lots of headaches down the road.

It's not something you want to do it yourself and get wrong.

 

[Rolf Latham]

Making enquiries with each lender is obviously very time intensive.

It is indeed..............................

thats why many use a specialist broker to do that work on their behalf.

In addition there is a bit more to it than that....... but the balance of the posts here already make it pretty obvious, its ok to do it yourself if you have a logical reason and the time.

Most DIY financers with limited resources ( time, salary, equity) do not get the anywhere near the optimum outcome.



ta
rolf

 

[Jamie M]

Hiya Grey Man

If you're in Melbourne - it might be worthwhile giving Pete a call (he's responded in this thread).

Super smart dude, good broker and all round nice guy.

If you're wanting to purchase multiple IPs it helps tremendously to have a good finance person on board.

Cheers

Jamie