2% Home Loans – What’s the catch?
When something sounds too good to be true, it usually is, right? That’s exactly what we were thinking when we were introduced to a 2% home loan. To our surprise, there’s no catch, but rather only a matter of ‘who qualifies for it’.
How it works is by giving you the biggest possible discount on your home loan, in recognition of having your investment loan with the one lender. Therefore, to benefit, you need both a home loan and an investment loan. So why would you do it?
The resulting structure means you get a much lower rate on your home loan – as low as 2% – so you can pay it off faster and optimise your tax deductions on your investment loan.
That begs the question: what about the Australian Tax Office?
Being in this space for many years, we’ve seen many products demise from treading too close to the line on what is reasonable. This subsequently draws the eye of the ATO, often resulting in a shutdown of the product and investors left holding the can with invalid deductions. Not so in the case of the Loan Reducer.
We are pleased to report that the ATO have already seen the mechanics of the product and granted Loan Reducer a product ruling. The ruling is on the ATO website (PR 2015/2). This means you enter into this product knowing you’re protected under Part IVA of the ITAA act 1936, and it will be treated as it was intended, with your investment deductions safely guarded and valid.
So after gathering all the facts, Vision has done the sensible thing and become licensed to provide the Vision Loan Reducer product.
Do you want to pay off your home quicker using a lower home loan rate, and pay less interest whilst maximising your tax deductions? It’s all possible with this smarter home loan!