Loan Restructure

[kjoshi]

Hi all, I need some advise on restructure of my loans for my own house and rental properties.

Currently I am dealing with two banks A and B.
My own house market value is say $1200000 and loan with bank A on this house is $670000 so LVR 55.8%
My two rental properties value is $435500 each and loan (interest only) with bank B on them is $250000 each so total $500000 so LVR 57.4% each
So total lending is $1170000 and total combine market value of all 3 properties is $2071000 so combined LVR is 56.9%

My mortgage broker is suggesting to restructure the loan and move all loan to Bank C.
Sell my rental properties to another LTC and have them on loan for $435500 each (so 100%) and reduce my own home loan to $299000.
This way I can pay off my own home loan faster and save some money.

My question is this a good option or too risky due to cross security.
What can be other options.

I created a table for the scenarios

OPTIONS	DESCRIPTION	LOAN	E-VALUE	LVR %
Two Banks	current own home	670000	1200000	55.83333
Current structure	current rental 1	250000	435500	57.40528
	current rental 2	250000	435500	57.40528
	current Total rental	500000	871000	57.40528
	Current total LOAN	1170000	2071000	56.49445
One Bank proposed structure	rental 1 restructure (sell to another LTC)	435500	435500	100
Cross Security	rental 2 restructure (sell to another LTC)	435500	435500	100
Paid off in 5 years @ 2.69%	own home restructure (reduced home loan)	299000	1218000	24.54844
	Overall loan amount remains same	1170000	2089000	56.00766
Two Banks after restructure	rental 1 restructure	322700	461000	70
	rental 2 restructure	287000	410000	70
Paid off in 9 years @ 2.69%	own home restructure (reduced home loan)	560300	1218000	46.00164
	Overall loan amount remains same	1170000	2089000	56.00766

Any guidance will be really helpful.

Thanks in advance.

[Anthonyacat]

I hate it when brokers give tax advice.

What you have described above would probably be deemed as tax avoidance, restructuring your affairs with the primary purpose of tax reduction/avoidance.

Speak to your accountant to see whether there is any legitimate way to achieve this goal. If your rentals are already in an LTC which it sounds like they are, theres a good chance you can legitimately make more of your debt deductible without a legal restructure.

[kjoshi]

I hate it when brokers give tax advice.

What you have described above would probably be deemed as tax avoidance, restructuring your affairs with the primary purpose of tax reduction/avoidance.

Speak to your accountant to see whether there is any legitimate way to achieve this goal. If your rentals are already in an LTC which it sounds like they are, theres a good chance you can legitimately make more of your debt deductible without a legal restructure.

Hi thanks for your input. I essentially approached my broker to review my overall loan structure because fixed rate of most of my loans are going to expire soon and I wanted to see the best way to use the opportunity to re structure my loans. My primary aim is to get rid of or reduce my owner occupied home loan as soon as possible. I really do not understand tax and legality of what he is proposing hence I am asking the question in this forum.

[Anthonyacat]

I really do not understand tax and legality of what he is proposing hence I am asking the question in this forum.

Is really a question for your accountant. Link them in with your broker and you'll get the best result.

[kjoshi]

Is really a question for your accountant. Link them in with your broker and you'll get the best result.

Yes I am in a process to find a decent Property Accountant. How about yourself, your signature says CLIENT LIST FULL, does this means you are no longer accepting new Clients.

[Anthonyacat]

Yes I am in a process to find a decent Property Accountant. How about yourself, your signature says CLIENT LIST FULL, does this means you are no longer accepting new Clients.

It does, I'm afraid. Closed up a couple months ago. Have a waitlist but I dont lose clients often.

Rosco here on the forum (Coombe Smith Waikato) is top notch. Have also heard great things about Tony Thorne, but he isnt a Chartered Accountant. Google either for their contacts.

Happy to take you on a waitlist, but either of the above will serve you well.

[kjoshi]

It does, I'm afraid. Closed up a couple months ago. Have a waitlist but I dont lose clients often.

Rosco here on the forum (Coombe Smith Waikato) is top notch. Have also heard great things about Tony Thorne, but he isnt a Chartered Accountant. Google either for their contacts.

Happy to take you on a waitlist, but either of the above will serve you well.

Okay thanks, I am contacting Coombe Smith but seems like they are busy too.