HI guys I'm new to the forum and fairly new to property investing, I have 2 investment properties and 1 is $200 a month cash flow positive and the other is $260 a month cash flow positive after expenses and also have a ppor which I'm paying P/I on with a offset account. I have read in the forums that some people have there ppor on I/O loans, my question is should I be changing my ppor to I/O as well, if I'm going to buy more property in the future. Any help would be appreciated , cheers
Question about I/O on ppor
- Thread starter Choc36
- Start date
changing to IO can help your servicing for new lending, and may benefit you tax wise if you have an offset account and will one day rent the PPOR out .
If you are good with money, IO with offset is a default usually
ta
rolf
Correct. The idea is that you can replicate the same repayments, but placing the principle portion in the offset account.
This provides you with maximum flexibility with tax should you make it an investment property.
Not everyone trusts themselves with 200k-1mil in their offset accounts though.
It's better for cash flow and flexibility.
If you find an extra couple hundred k lying around, chuck it in the offset to reduce your non deductible debt interest.
Otherwise, where else would you put it?
If you need the money to invest or buy something, withdraw it from your offset.
It's just like a savings account but you don't have to pay tax on the interest.
If you find an extra couple hundred k lying around, chuck it in the offset to reduce your non deductible debt interest.
Otherwise, where else would you put it?
If you need the money to invest or buy something, withdraw it from your offset.
It's just like a savings account but you don't have to pay tax on the interest.
If you're disciplined with money and will make regular contributions to your offset account then this structure can work out well.
As Rolf said - it can be great for future borrowing capacity too, particularly when the lender you apply with takes the debt you have with other banks at "actual" repayments and not an inflated amount.
Cheers
Jamie
Hey Choc,
Welcome to the forums. Firstly good job on the investments to date, for someone new to property investing your certainly doing well with 3 properties.
Regarding the CF+ properties how have you achieved this? Did you buy in regional towns or perhaps did you lay down larger deposits?
Welcome to the forums. Firstly good job on the investments to date, for someone new to property investing your certainly doing well with 3 properties.
Regarding the CF+ properties how have you achieved this? Did you buy in regional towns or perhaps did you lay down larger deposits?
Yes they are in a regional area, I bought 1 that was a mortgage in possession and got it for 35000 under what it was valued at, and the other one was my ppor turned into a I/P, but I don't think there will be a lot of capital growth with these properties. My next plan is to try and find something that will have capital growth so it can give me more borrowing power in the future hopefully. Cheers
