Borrowing home loan from parents and mortgaging it later.

Hi All,

Last year Nov 2011, I have borrowed money from my parents in full and purchased a property for $250k. My parents are also kind enough to not charge me interest.

At this point in time, I have paid off $50k to parents and the current owned amount to my parents is $200k. I have also just moved out of my property to live with my parents and currently renting out my property.

Now with a stable and secured employment, I am planning to take out a mortgage on the property for the remaining $200k and pay back my parents.

Now the million dollar question is, Will I be eligible to claim deductions on the interest incurred from my 200k mortgage to be taken out?

Any input would be greatly appreciated. Thanks!

Mugen