Prepay interest worth doing in this case?

[DoobyNuts]

Hi just wondering if someone could pleas tell me if below scenario makes sense and if it is worth prepaying interest this year given:

2014/2015 Gross income -$230k. Net - $210k.
(47% tax bracket includes budget repair levy).

2015/2016 expected income - $160k (37% tax bracket)

$1.2 million in various IP loans all variable at 4.53% so roughly 55k a year interest only.

So if I could prepay $30k in interest for next year before end of June then it would bring me back down to $180k net and I would potentially save 14k in tax. Is this correct? Worthwhile doing?

Does that also mean I have to fix a proportion of my loans to achieve a 30k prepayment? And that it is not an easy process to revert back to variable as it would just be a once off?

Cheers,
Dooby

 

[Paul@PFI]

prepayts are all a 1yr fixed rate loan. You cant fix a variable rate loan.

Don't forget once you fix you must repeat this process every year. Forget and you have a year with NO deduction for interest.

 

[wylie]

You do need to fix in order to prepay, but you can fix for one year, two years etc.

And you do risk being stuck next year with having to prepay again.

We have several loans, so can choose to fix and prepay some or all each year, to suit our needs for that year, so this problem of "all or nothing" doesn't mean we are stuck with prepaying each year like we would have to choose if we had just one large loan.

Do get in early because you cannot just prepay a year's worth of repayments/interest. It is arranged, documents are prepared, signed, witnessed and returned, and hopefully your bank gets it done before 30 June.