Some advice please

Hey all

I have been thinking a few years down the track and, as I have stated before, I am happy with the amount of property I own but am considering purchasing another Sydney IP if interest rates rise and it becomes a 'buyer's ' market.

We own a home in Sydney and have one IP also in Sydney. Additionally, we have a lifestyle property in NSW earning no income and a unit overseas. These properties are something that the larger family uses and earn no income at all.

Our PPOR is owned outright although when we purchased the Sydney IP we borrowed 105% and used it as collateral for the loan.

Yep, we cross collateralised and that is still the case.

PPOR value around $950,000
IP value around $1,000,000

Last month we fixed about $350,000 for 5 years at 4.99%. The IP is about $5,000 cash flow positive pa but for tax purposes this is negated by non cash deductions, ie, depreciation.

This forum has been invaluable since I have joined and I have learned heaps about x coll but at the time there was no choice.

My thoughts are the following;

1. Pay the transfer costs and pull the PPOR from being the bank's security. I expect that the IP would be more than enough for St George on the fixed loan.

2. At some point nearer to purchasing another IP I would like to pull some equity out of the IP for a deposit of around 20% of the new property plus transaction costs.

Have I 'snookered ' myself from drawing equity out as in step 2 by having a fixed rate loan for 5 years? If so, I suppose I can pull equity out of the PPOR when I take it of the bank's security.

Ideally I don't want to cross coll again and have a separate loan for each of the 2 IPs if the situation arises to purchase one in the future.

Appreciate any comments

regards
 
1. Pay the transfer costs and pull the PPOR from being the bank's security. I expect that the IP would be more than enough for St George on the fixed loan.

2. At some point nearer to purchasing another IP I would like to pull some equity out of the IP for a deposit of around 20% of the new property plus transaction costs.

Have I 'snookered ' myself from drawing equity out as in step 2 by having a fixed rate loan for 5 years? If so, I suppose I can pull equity out of the PPOR when I take it of the bank's security.

Ideally I don't want to cross coll again and have a separate loan for each of the 2 IPs if the situation arises to purchase one in the future.

Appreciate any comments

regards

1. You won't be transferring but just discharging a mortgage. This wil mean a discharge of mortgage fee and possibly a valuation fee so the lender can make sure there is enough equity.

2. If there is enough equity in the IP to suppose its loan and a new split then it doesn't matter that the other existing loan is fixed - if you stay with the same bank. If the current bank won't lend then you may want to move lenders and this is when the fixed loan will restrict you.

You could also set up a LOC on your unencumbered PPOR and do this at the same or a different lender.
 
partial discharge will do the trick, and even if there isnt sufficient LVR support, with most lenders you dont need to break the whole fixed rate loan, but just do a partial break.

Obviously seek an estimate on fees before committing to same

ta
rolf
 
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