New-Loan launches tax-effective loan
New-Loan has launched the Tax-Smart All-In-One Loan to take advantage of the High Court ruling in favour of split-loan products. The new line of credit loan allows home buyers with other investments to pay off their home loans within five to six years.
However, the news that the ATO will appeal the ruling brings uncertainty to the future of this product.
These split-loan packages combine a home loan and an investment account into one package, and allows borrowers to use their available cash flow to pay off non-deductible debt first. Repayments on the investment account can be deferred until the home loan is paid off.
Tax-Smart All-In-One can accommodate up to six separate loan accounts. Loans can be segregated according to their purposes, such as property investment, share trading, business or personal use. The borrower can select which account he repays and which he defers repayments on.
As an example, a $250,000 home loan could be combined with a $350,000 investment loan, at an interest rate of 6.69 per cent over a typical home loan term of 25 years. The home loan portion could be paid off in six years and a quarter years, saving the borrower over $400,000 in repayments. He could also claim an extra $206,000 in tax deductible interest.
Other benefits of the Tax-Smart All-In-One Loan: a zero interest Visa card; unlimited free ATM and EFTPOS transactions; unlimited free Internet and phone banking; salary crediting and cheque facility.