Reduce LVR or build up offset?

Hi Somersoftians,

I'm hoping for a bit of advice from you all, but first, the scenario:

I've just settled on my 4th property to round out my portfolio to approximately neutral, which has increased my LVR with CBA to practically the maximum. My plan is now to sit tight and wait for approximately 12 months during which I plan to do a cosmetic reno on #4 and hopefully should see an increase in value to #1 to result in more equity continue acquiring IPs. I'm also parking as much of my own funds as possible into my offset on #3; I do not have a PPOR for which to attach an offset account.

  • Property 1 - CBA Principle and Interest - LVR 94.55%
  • Property 2 - CBA Principle and Interest - LVR 93.91%
  • Property 3 - Building Society with offset account Interest Only - LVR including offset amount 88.95%
  • Property 4 - CBA Interest Only - LVR 94.90%

My question is, would it be a bad idea to change #1 and #2 to interest only and funnel the excess into the offset account on #3, or am I better to continue paying principle and interest on #1 and #2 to decrease LVR for the next 12 months or so?

Looking forward to your feedback, just let me know if I need to provide more info.

Cheers!
 
I/O on all loans.
While paying principal means you can theorectically reborrow that amount later, that depends on the val, and the banks policies, and your situation at the time.

Dont chance it. I/O with offset for surplus funds.
 
definitely interest only and put in the offset account. (assuming you dont spend it! )
Hi Somersoftians,

I'm hoping for a bit of advice from you all, but first, the scenario:

I've just settled on my 4th property to round out my portfolio to approximately neutral, which has increased my LVR with CBA to practically the maximum. My plan is now to sit tight and wait for approximately 12 months during which I plan to do a cosmetic reno on #4 and hopefully should see an increase in value to #1 to result in more equity continue acquiring IPs. I'm also parking as much of my own funds as possible into my offset on #3; I do not have a PPOR for which to attach an offset account.

  • Property 1 - CBA Principle and Interest - LVR 94.55%
  • Property 2 - CBA Principle and Interest - LVR 93.91%
  • Property 3 - Building Society with offset account Interest Only - LVR including offset amount 88.95%
  • Property 4 - CBA Interest Only - LVR 94.90%

My question is, would it be a bad idea to change #1 and #2 to interest only and funnel the excess into the offset account on #3, or am I better to continue paying principle and interest on #1 and #2 to decrease LVR for the next 12 months or so?

Looking forward to your feedback, just let me know if I need to provide more info.

Cheers!
 
Thank you everyone!

Thank you Aaron, Tobe, PT and Jon,

I'll get on to CBA ASAP to change the first two loans to IO, (and make sure not to spend the excess, Jon!).

Ahh, I love this forum...:D
 
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