Loc

[joycenmat]

Hi,

I have a IP home loan and it is fixed i was only 20. Locked in now til Nov 10 then i will re finance.

Should i add an offset account to put all my repayments into so i can withdraw to buy more property and offset my interest.

I want to eventually have the loan for the IP there and also a cash offset account attached to it to dep my repayments into.

Purchasing a approx 170k property soon with rent that nearly covers the loan, so should i do the same with that.

I am new at strategies and although on here and reading books etc it still gets me slightly confused as to whats better long term.

[jezza]

Joycenmat

Do you own a PPOR?

If you do then this is what your offset account should be set against. If not choose the loan that gives you the best advantage. You can only offset against 1 account. Also get ready to negotiate with your lender/broker. When you come off fixed you will go back to the standard variable rate ( you may be on a package that gives a immediate discount) but start to search for more.

Jezza

[joycenmat]

I have a broker i am working with. As soon as i come off it we are negotiating for a better deal.

I dont have a PPOR. I want to buy two more IP properties with my dad helping (who will get 10%) to help me. I do the leg work he just helps me with some legal fees etc.

I will hopefully bu Aug/Sep have three IP properties each with only minimal gap payments between rent and repayments.

I am just unsure on what loan to take out for IP properties. My agent said interest only is an option.

[jezza]

Joycemat

Some on this site will go with the paying off method and some will go with interest only. You can use the search engine component where some have actually put some mathmatics around it. I myself go with the interest only. As it is an investment the interest component is tax deductable, the principal is not.

Jezza

[Rolf Latham]

If u dont have a PPOR, BUT are looking to buy one some day then

Interest only for all loans and

One loan with a 100 % offset account that you park your spare cash against

tarolf

[joycenmat]

Thanks Rolf,

was a very handy post. I will do that.

A man told me to get my structure right as its really important.

[mary&mat]

Hi Joyce,

I know this thread is about LOC, but when you mentioned 'getting your structure right'....have you looked into buying your properties in trust?

It sounds like you're pretty ambitious with wanting to purchase a few this year, (good on you!), & it's not really necessary for everyone, but trusts can offer some protection for your IP's.

I've only just started to understand them a bit myself, but I think some trusts offer flexibility of where you assign property losses to & other benefits. Perhaps you could also consider this prior to buying?

Best of luck,
M&M

[joycenmat]

I did look into trusts as my ambitions will outweight just a simple loan structure I do have a few to purchase this year i think 4 IP's.

I need to talk to an accountant (i have one) and also a lawyer to sort out the legalities involved as well.

It basically is like a business as well and may make tax simpler. BUt it also could mre restrictive.

Anyone else have any trust ideas? Info? etc

[our obsession]

I have 7 IP's and 11 blocks of land to play with (just making my way building on some).

I do not have a trust.

Just my preference. I like to keep things as simple as possible. So far so good.

[clockwork]

Im actually speaking to my accountant tommorow about trusts and whether it makes sense for me.. However the reasosn I want a trust are not for protection, but for distribution of profits to my partner.

But downside of a trust is you pay land tax from the get go. No threshhold. Also losses are quarantined within the trust and cannot be offset against your own profits. These may be a showstopper for me as I want the trust to generate an income sooner rather than later, so may be better off putting high dividend shares in the trust instead!!!

Will see how it goes.