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Hi Peter, thanks for your comments, I think I'm sold now on the idea of using the LOC to capitalise the interest, rather than capitalising with the IP loan... probably easier to manage it this way, even if the interest rate is a bit higher using the LOC. The bit I'm not sure about now is...

Hi Emu... ok, just did, couldn't see anywhere it addressed my last question. Was there a particular section you wanted to point out?

Having thought about this again... I suppose you would just ensure that the maximum limit on the LOC plus IP Loan was within the agreed LVR, and then you could capitalise up to the LOC limit with no problems. It just means that using this structure you need a greater amount of equity...

Is the amount in the off-set account taken into consideration when calculating the total loan amount, for the purpose of calculating LVR? Or would using the structure described in this thread cause LVR to increase as the IP loan interest is capitalised? If so, this could be a major...

Hi Redwing, thanks, yes that makes sense, I can see your point... However, what if the IP Loan limit is set higher than needed to buy the IP. For example, say I arrange the IP loan limit for $800K, but I only need to draw $600K to actually buy the IP, then I have $200K spare for capitalising...

Let me try to summarise this discussion to see if I understand correctly... - - - - - It's not OK to capitalise interest on an IP loan, but it's OK to pay the interest on an IP loan using a Line of Credit and capitalise the interest on the LOC. Right? So... if the same amount of...