Loan Structuring...
- Thread starter Kunzy
- Start date
Hi SS, just another question regarding the interest only split loan (Loan B) that I have now set up.
I was advised by the bank that the redraw facility only allows redraws to another of my (ie. normal savings) accounts before I can transfer funds to other accounts - is this still ok?
I have attached a new offset account to the new split loan to separate it from everything else, would it be better to redraw to the offset then transfer to other accounts ? Or get the bank (NAB) to allow me to redraw straight out into other accounts ?
I was advised by the bank that the redraw facility only allows redraws to another of my (ie. normal savings) accounts before I can transfer funds to other accounts - is this still ok?
I have attached a new offset account to the new split loan to separate it from everything else, would it be better to redraw to the offset then transfer to other accounts ? Or get the bank (NAB) to allow me to redraw straight out into other accounts ?
if u cant draw direct, then some would argue that deductability is questionable dependon on how you get the money out and to the seller.
An attached offset acct that is clear of non borrowed funds and has no other transactions in and out should be fine.
Some would argue to use a LOC or get a PBR on the use of the sole offset.
ta
rolf
Hey All,
I seem to read a lot about PPOR becoming IP's and that it is not ideal that so much principal has been paid off.
If this is the case is there ever really any benefit to paying off principal on any loans if you plan to invest in property? Are you just not better parking the extra funds in an offset (warranted you are a good saver and do not see all this extra cash as a holiday each year).
I mean most people can expect to go through a few properties in there time as circumstances change. Start of as a couple in a 2 bedder, upsize when the first child comes along, upsize when the third does, move to the beach once the kids move out, downsize to low maintenance when your older.etc
I seem to read a lot about PPOR becoming IP's and that it is not ideal that so much principal has been paid off.
If this is the case is there ever really any benefit to paying off principal on any loans if you plan to invest in property? Are you just not better parking the extra funds in an offset (warranted you are a good saver and do not see all this extra cash as a holiday each year).
I mean most people can expect to go through a few properties in there time as circumstances change. Start of as a couple in a 2 bedder, upsize when the first child comes along, upsize when the third does, move to the beach once the kids move out, downsize to low maintenance when your older.etc
I agree with you 100% albanga. When we bought our first PPOR we set up a 85% LVR, no LMI loan (ah those were the days 
) and went interest-only with all funds parked in offset. 5 years later, what I thought was my "forever home" is actually going to be an IP as we are upgrading. I don't know if anyone can be truly certain that their PPOR will be a forever home. What if your work relocates you somewhere awesome with all expenses paid? etc etc. Best to keep all options open unless you really need to stick to the discipline of paying back P&I.
) and went interest-only with all funds parked in offset. 5 years later, what I thought was my "forever home" is actually going to be an IP as we are upgrading. I don't know if anyone can be truly certain that their PPOR will be a forever home. What if your work relocates you somewhere awesome with all expenses paid? etc etc. Best to keep all options open unless you really need to stick to the discipline of paying back P&I.
Paying off loans is generally a good thing. But from a tax saving point of view it may be better to not pay any loan down at all, but utilise the offset account to make the same savings.
However if you are tempted to spend money this strategy may not be for you.
Hey Terry,
This was my thinking and you are spot on. The key problem I see with this strategy is having all this money sitting in an offset account and readily available to spend. This is all well and good whilst there is little money in there but what happens in 10 years time when there is $150,000 sitting in the account and you just want a get away. It would take a very diligent saver not to dip into this.
But that's human psychological error and nothing wrong with the strategy.
