I believe there is, expecially if you want to make it an IP down track.
My understanding is that if you want to turn your PPOR into an IP down the track you cannot redraw the excess funds to use to buy a new PPOR and then claim the interest against the old PPOR(now an IP) as it was directed to a non deductable asset.
I believe if you put in an offset account you can use for non deductable asset and the amount owing on the original PPOR(now an IP) is deductable as you have not redrawn it, but you had the same interest saving effect as paying mortgage in advance while it was your PPOR(assuming 100% offset)
Hope this makes sense, this is what i was told by my accountant, obviously check with yours, usual disclaimers apply.
It depends on whether you plan on keeping your PPOR as a PPOR forever or eventually turning it into an IP.
We made the mistake of going with the redraw, but now realise that we will want to upgrade in the near future. Unfortunately, we have no already 'contaminated' our loan significantly, so now rather then keeping this place as an IP when we upgrade, it may make more financial sense to sell and buy a different property as an investment... I will have to run the figures on that in a few years when we do upgrade.
I just thought of one thing, if I redraw to purchase shares/property, wouldn't that make part of the interest deductible as it's been used for an income producing asset? However with an offset it wouldn't as it never paid down the loan...
I know lots of this stuff has been posted before, which I'm reading now, I'm just trying to get my head around it all....
i would say it makes more sense to have an offset for your ppor than an ip. on your ppor, the offset is reducing your non-deductible debt, while remaining available for other things. offsetting your ip reduces your deductible debt, reducicing your allowable deductions. but if all you have is ips, then offsetting is a better option still, because it enables you to move this money to offset the ppor in the future.
Thats a good back up plan if we are replacing like for like debt. Should not be relied upon perhaps as a strategy ? Some would argue that an apportionment of the previous personal debt should be applied to the new IP secured loan, thats more of an acctant question though.