Hi all,
Been speaking with my accountant and it seems my understanding of capitalising interest is not going to work, so can anyone make some suggestions as to how I can offset my PPOR debt as quickly as possible from the below scenario?
Mortgage 1 (PPOR) $175,000 - currently putting in fortnightly payments from salaries above minimum payment required.
Offset account: $95,000
Mortgage 2 (IP1) $200,000 - interest payment fixed at $1,160 per month
Mortgage 3 (IP2) $353,000 - interest payment fixed at $2,260 per month
LOC - $100,000 and $80,000 used for IP2 so deductible interest, $20,000 available.
Property A/C - salary deposited to pay interest on LOC / IP1 / IP2
Everyday A/C - Rent and remaining salary
Any excess in Property A/C or Everyday A/C is transferred to Offset account or paying credit card.
My plan is to get the Offset account equal to the loan balance on the PPOR so that all future payments can come straight from Offset and then no salary funds need to be deposited in the future (freeing up servicibility and removing non-deductible interest).
How would you structure the interest payments so that the salaries can go into the offset and not used on the interest for IP/LOC. eg. Capitalise Interest using the $20k LOC?
Would doing this actually have a benefit, wouldn't the extra going on the LOC cancel out the extra you are putting in the Offset... am I missing something?
Any ideas on how to re-structure things?
Thanks
OG
Been speaking with my accountant and it seems my understanding of capitalising interest is not going to work, so can anyone make some suggestions as to how I can offset my PPOR debt as quickly as possible from the below scenario?
Mortgage 1 (PPOR) $175,000 - currently putting in fortnightly payments from salaries above minimum payment required.
Offset account: $95,000
Mortgage 2 (IP1) $200,000 - interest payment fixed at $1,160 per month
Mortgage 3 (IP2) $353,000 - interest payment fixed at $2,260 per month
LOC - $100,000 and $80,000 used for IP2 so deductible interest, $20,000 available.
Property A/C - salary deposited to pay interest on LOC / IP1 / IP2
Everyday A/C - Rent and remaining salary
Any excess in Property A/C or Everyday A/C is transferred to Offset account or paying credit card.
My plan is to get the Offset account equal to the loan balance on the PPOR so that all future payments can come straight from Offset and then no salary funds need to be deposited in the future (freeing up servicibility and removing non-deductible interest).
How would you structure the interest payments so that the salaries can go into the offset and not used on the interest for IP/LOC. eg. Capitalise Interest using the $20k LOC?
Would doing this actually have a benefit, wouldn't the extra going on the LOC cancel out the extra you are putting in the Offset... am I missing something?
Any ideas on how to re-structure things?
Thanks
OG