Hi everyone
Just a quick query regarding your thoughts on the best way to use a LOC in my scenario.
OK, we have a fully paid off PPOR and will shortly be buying IP #1. We have no debt at present.
IP #1 will be financed with 20% deposit + costs in cash; the rest being borrowed via a LOC.
In the future, the plan is to add more IPs or shares by increasing the limit on the LOC and adding sub accounts.
In summary, we will just have a LOC and a 'normal' everyday transaction bank account. I understand that interest will be charged to the LOC each month, and we will transfer money to that account to cover the cost, if needed.
My questions are regarding income and expenses, in terms of making management and accounting simpler.
- where should normal (salary) income go? (LOC IP #1 account or transaction account)
- where should rent income go?
- which account should be used to pay rates, repairs etc?
- is it best to build up more savings in the transaction account (or term deposits, or whatever), or reduce the LOC interest by having spare cash in there? (understanding, of course, that any extra payments in the LOC cannot be drawn out for personal expenses)
Thanks!
Dave
Just a quick query regarding your thoughts on the best way to use a LOC in my scenario.
OK, we have a fully paid off PPOR and will shortly be buying IP #1. We have no debt at present.
IP #1 will be financed with 20% deposit + costs in cash; the rest being borrowed via a LOC.
In the future, the plan is to add more IPs or shares by increasing the limit on the LOC and adding sub accounts.
In summary, we will just have a LOC and a 'normal' everyday transaction bank account. I understand that interest will be charged to the LOC each month, and we will transfer money to that account to cover the cost, if needed.
My questions are regarding income and expenses, in terms of making management and accounting simpler.
- where should normal (salary) income go? (LOC IP #1 account or transaction account)
- where should rent income go?
- which account should be used to pay rates, repairs etc?
- is it best to build up more savings in the transaction account (or term deposits, or whatever), or reduce the LOC interest by having spare cash in there? (understanding, of course, that any extra payments in the LOC cannot be drawn out for personal expenses)
Thanks!
Dave