Bank Account Structure

From: Andrew G


Hi all - my last post may not have made a great deal of sense .... lets look at it this way. Here is my current situation:

1. Bank Account "A" - our salaries go into this account.
2. Bank Account "B" - our home loan account.
3. Bank Account "C" - rent goes here from IPs.
4. Bank Account "D" - IP#1 P&I loan, money comes from account "C".
5. Bank Account "E" - IP#2 P&I loan, money comes from account "C".

When I find another IP to purchase, how would you work it with the above in mind? Do I keep account "C" and make it an offset (or do I need to close it to start again?) I'm sure there's many ways it could all be structured, but I'm hoping to get quite a few more IPs so the bank details could get a whole lot more complicated!! BTW the P&I loans are fixed for a couple of years, so they have to stay as they are.

Thanks for your help,
Andrew.
 
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Reply: 1
From: Rolf Latham


Hiya Again

if I read you correctly then

ALL income includng rents should go into just one offset acct. The one linked to the Home Loan.

Why ? Because that way your positive cashflow gives you a tax free reduction in your home loan.

You want to reduce the amount of Home Loan Interest you pay, rather than the amount of IP interest you pay.

ta

Rolf
 
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Reply: 1.1
From: Richard Hunt


Andrew,

I'm with Rolf on this one.

Only additional comment is that if your current home loan doesn't come with an offset a/c and you contemplate refinance (internal or otherwise) to obtain a home loan with offset, do a quick cost/benefit before you jump -- ie. cost of refinance versus estimated interest savings over remaining life of home loan.

Regards
Richard
 
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Reply: 1.1.1
From: Andrew G


Thanks for your response.

As I only have 9,000 left to pay off the house completely I haven't worried about an offset as any extra money goes onto the home loan anyway. I estimate the home loan will be paid out early next year anyhow, so I'm kind of putting this out of the arena for now. It's really just a case of working out the "rent holding account" and IP loans to the best way possible, as I've now got two more which are settling within a few weeks time, so the bank details are going to get more complicated again .....

Thanks,
Andrew.
 
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Reply: 1.1.1.1
From: Rolf Latham


Hi Andrew

In that case simplify your life.

Still have an offset acct linked to just one of the Ips and pay ALL your cash into this account, and dd all your payments from this account, assuming that you dont want to capitalise interest i which case we are talking a diff structure alltogether

ta

Rolf
 
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