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Releasing equity in IP with no redraw

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Joey11 | 16 Jun 2013, 10:30 PM Agree 0

Need some advice please.

Purchased IP 4 yrs ago for 800k, since then have paid off 400k from loan with NO REDRAW. We are now moving into the IP and it will be our PPOR for the next 12 months whilst our new family home gets built.

Is there any way we can get the 400k equity we paid back without selling the property as we dont have redraw option?

Thanks in advance.
  • Eos Property | 17 Jun 2013, 06:06 PM Agree 0
    Hi Joey,

    A couple of issues.

    You can refinance the loan using the property as security for additional borrowings. If you do this there are a couple of things you need to be aware of

    If the funds are used to help pay for new home the interest will not be deductible as they were used to pay for your home.

    If the funds are used to help pay for a new investment property they will be deductible.

    In case you are better off splitting any new borrowings into two separate loan facilities. This will clear things up from a deductibility perspective.

    Further to this - sounds like you need to convert this loan into an interest only loan and link it to an offset account. There is little point in continuing to pay off your investment loan when you have/will have non-deductible debt on your new home.

    Recommend you find yourself a broker who is also a property investor - they SHOULD know what you need to do.

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