How should interest repayment be setup in LOC?

I am wondering how I should set interest repayment on my construction LOC. It is the first time I use one so should I

1. Add to LOC, however I saw post earlier about how you can not claim interest on interest, or

2. Debit from another transaction account, however I am not sure if interest adds to LOC, then subtract back from LOC making it look like I am repaying some of the principle which reduce deductibility.

Also later on after construction, will I maintain same tax deductibility to convert the LOC back to cheaper standard variable?
 
If that's possible yes but some lenders LOC's don't have the direct debit functionality so you have to set up a monthly payment yourself. You could set a reminder to check at the beginning of each month what the interest was for the previous month and pay that amount across.
 
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