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Capitalising does not improve your serviceability. You capitalise interest by borrowing more money than you need, a higher loan means lower serviceability next time. It does not improve your cashflow. As the amount owing on the loan you're using to capitalise increases, so does the...

If you use a LOC to make the repayments, you'll run into several problems... 1. Your borrowing capacity is reduced, not increased. The LOC is an additional loan which you have to make repayments on and will be taken into account when you're applying for the next loan. 2. The LOC probably...