How Does Interest in Advance Work?

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EdwinaW
Posts: 71
Joined: Tue Nov 15, 2011 9:26 am

How Does Interest in Advance Work?

Post by EdwinaW »

Hey everyone,

I was reading the discussion on 'Interest in Advance' a few weeks ago on this very forum. Now as you know, the tax season is approaching and it turns out with my income this past tax year, I may be pushing myself into a higher tax bracket and I need a way to lower my tax burden.

I was hoping interest in advance would work for me but I may find myself having to refinance my investment property to take advantage of the interest in advance as I'm not sure whether I can do this with my current lender.

Can someone please give me an idea as to how I can pay my interest in advance and use this as a tax deduction. Very sorry about the basic nature of this question but I'm completely new to the Australian financial system and need some guidance on the right places to go to.

Thank you all very much for your generous help.

Regards,

Edwina

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otea
Posts: 65
Joined: Wed Mar 31, 2010 10:35 am

Re: How Does Interest in Advance Work?

Post by otea »

Hello,

It's good that we are talking about Interest in Advance! I wanted to just ask how much in advance should I be refinancing with a lender that offers interest in advance so that I don't miss the tax due date of June 30th!

How fast is a fast refinance? Does anyone have experience with this? I heard some horror stories about fast refinance being not all that fast. One of my friends lost out on paying the interest in advance by the tax due date because his 'fast' refi took over a month!

Is this pretty normal for a fast refi to be slow or was that just one isolated incident with a lender that shall not be named?

Thanks all for the input.

Regards,

Ot

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Hoa Hong
Mortgage Specialist
Posts: 331
Joined: Thu Aug 26, 2010 10:15 am
Location: Sydney, Australia
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Re: How Does Interest in Advance Work?

Post by Hoa Hong »

Morning Guys,

Good topic.

Interest in Advance options are available on interest only Fixed Rate Investment Home Loans, which you pre-pay next year’s interest now and claim it back as a deduction this year. In most cases you will receive a discount on the rate and a set rate for the next 12 months. If you are eligible for this option you will get part of the interest back in the form of a tax deduction.

We have refinanced a lot of clients through the Fast Refi program which means a refinance can be done in about 2 weeks. To go through the normal process i would leave 3-4 weeks time frame to get this process up and ready. We are doing quite a few refinances now in anticipation for this period and obtain excellent rates for our new clients.

jamescharls123
Posts: 9
Joined: Wed Mar 07, 2012 6:28 pm

Re: How Does Interest in Advance Work?

Post by jamescharls123 »

I think it would be much better for you if you concern with local tax adviser about it. He can help you well as he would be much familiar with Australian finance policies.

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