Your Investment Property forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Using your line of credit facility for the investment deposit

Notify me of new replies via email
Vanessa | 25 Oct 2012, 10:40 PM Agree 0
Hi. Both my husband and I are about to buy our first investment property and I was wondering if we should draw down our home loan Line of Credit facility to avoid the LMI or should we try and borrow as much as we can and pay the LMI? It is an investment property so can assume borrowings are tax deductible. We are not planning to use the same bank in which holds our residential home as security.
  • Eos Property | 20 Nov 2012, 07:40 PM Agree 0
    On the face of it the line of credit option looks best BUT do you use the line of credit for personal expenses? or have you used the line of credit for personal expense? If the answer to either of these questions is yes then you are best served by splitting your line of credit into two parts before you purchase the property. Mixing personal and investment debt creates all sorts of taxation issues moving forward. Best to get it right at the start.
    Paying LMI is not always a bad thing - your personal situation will determine if this is advantageous to you. I have always paid LMI whenever I bought IPs. It preserved my equity and meant preserved my flexibility going forward.
Post a reply