Is this loan structure sound enough?

Hi there,
This is our 2nd purchase and we are quite green still on buying property. I was hoping that someone could confirm that my potential loan structure is sound as we are going to make an offer on a property and obtain finance soon. This is for a PPOR which we do not intend to convert to an IP as it is semi rural and I personally don’t think it will have a very good rental yield.
Property price $535K
Deposit $200K
Loan amount $335K split into 2 parts
$100K Fixed P&I – to give some certainty of repayments and also so that we can drop money from the offset in here if we want to get a LOC to purchase an IP. We would also feel like we would be paying the property off as vs having the full amount in an interest only arrangement
$235K Variable Interest only with 100% offset – We would like to park money in here so as to lower our repayments.

We would appreciate any thoughts or feedback. Thanks in advance
 
Set up the investment split now in case rules change, or you situation changes.

Loan amount total $428,000

Split One I/O Fixed $100,000 (if you want some fixed)

Split Two I/o Var $235,000 offset account attached put all savings in here

Split Three I/O Var $93,000 Pay down to zero at settlement so when you spend it all the interest is tax deductible and only use for investment, I wouldn't go LOC I would just have variable for cheaper rate.


Good luck
 
Thank you Bigtone for your reply.
I noticed you put I/O for split one, is it not ideal to pay off some principal for a PPOR not being converted to an IP?
By split 3 do you mean a loan with redraw facility? Sounds like a good idea :)
 
Hi Vampil,

I like interest only as you control the minimum repayment not the bank.

By saving money in the offset account on split 2 you are reducing the interest charge and in effect reducing the loan balance but just in a more flexible way.

Yes loan with a redraw, 10 years interest only would be my set-up for split 3.

Cheers
 
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