Loan Refinance Dilemma

Pras1 on 22/06/2021 - 19:49
Last edited 22/06/2021 - 20:56 by 1 other user

I have a PPOR with 2.7% interest rate with only $1000 left to pay. Also have an investment property negatively geared with a 3.25% interest rate. About 370k loan remaining and have got offset account which has 120k in it. Both loan in package with a big 4 yearly cost of $395/year.

Finally I'm looking to refinance with more competitive loan rates and refinance cashback offer available.

Options:

1. Pay off PPOR and refinance investment property loan with offset.
2. Refinance both and keep PPOR loan open.

Any suggestions would be appreciated.

Also please let me know if you know of any competitive owner occupied and investment interest rates with offset. Cash back would be bonus.

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  Rrpnothanx on 22/06/2021 - 19:55

  PPOR loan Owner Occupier on your investment property.

  2.1%ish interest rate

  Does your principal home get you a better rate from the bank?
  Or they both should get you same?

  Eg: small apartment vs stand alone?

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  Pras1 on 22/06/2021 - 20:07

  Ppor loan should be lower than investment loan. Ppor loan may be better rate but not tax deductible. Ppor single storey home and inv town house unit in Melbourne

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  SmiTTy on 22/06/2021 - 21:19

  +4

  Why would u have 120k in the offset of your IP loan, but still have 1k left to pay from your PPOR?

  I would
  1) take out 1k from your offset and pay out your PPOR. Close out the account
  2) refinance your IP to a better rate and at the same time, take out a new loan against your ppor with offset. Use those funds to buy an investment property so that it is also tax deductible

  That's assuming you're open to buying a new IP. If not that's okay. Maybe take take out smaller loan against your PPOR and plonk it in an etf.

  If u don't want to go thru the hassle for your PPOR, and your PPOR has a redraw facility, you could still pay off your PPOR then redraw everything out to put towards an investment and claim the deductibility (but if you already going thru refinancenfor IP u might as well do it for ppor and get a better rate)

  Whichever way u choose, you're in a great position having basically paid off your ppor. (so a good "dilemma" to have)… Congrats.

• 

  Pras1 on 23/06/2021 - 07:16

  Thanks for your response.
  Just kept ppor acc open so that I may want to use the funds elsewhere. Have got redraw on it though.
  Ips are good option but market is thru the roof atm.
  New to etf's but have started to look into it.
  Will have to refinance at least the IP with the interest rates at their best.

  With stocks and properties at peak my dilemma is just getting more complex.
  May be its time to keep funds ready to strike at time of correction.

  If u have any other suggestions plz add.
  Cheers

  • 

    gumbo45c on 23/06/2021 - 09:01

    As Smitty has given you some good advice - I can only add that I was able to get a PPOR loan at 1.77% (HSBC 2 year fix negotiated with a cashback offer) recently and that I think it is a good time to fix however a lot of people are refinancing right now and processing takes time so move early before the rates do.

    • 

      Pras1 on 23/06/2021 - 11:09

      Thanks for ur advice
      What was the loan amount and how much cash back you scored?
      1.77% looks like below advertised rate. Also how long was processing time?
      How has your banking experience been so far?
      Also did u go via broker?