Operationally the above two strategies seem to achieve the same result. But from my other posts recently it would seem there is a big difference in how each strategy might be treated from a taxation point of view.
In that situation, having an IO loan linked to an offset account seems to be favorable, because, unlike a LOC, you are never "drawing back" out of the loan.
From my observations, it seems lenders will happily give you a LOC against your PPOR for any worthwhile purpose (including non-deductible purposes like new car, boat etc), whilst I haven't heard of lenders offering an IO loan with offset facility even though it achieves the same purpose.
Is this because the usual LOC loan starts out with a $0 balance whilst an IO loan starts out as $X and the offset at $0 balance?
In that situation, having an IO loan linked to an offset account seems to be favorable, because, unlike a LOC, you are never "drawing back" out of the loan.
From my observations, it seems lenders will happily give you a LOC against your PPOR for any worthwhile purpose (including non-deductible purposes like new car, boat etc), whilst I haven't heard of lenders offering an IO loan with offset facility even though it achieves the same purpose.
Is this because the usual LOC loan starts out with a $0 balance whilst an IO loan starts out as $X and the offset at $0 balance?