Refinancing cost ? Where to allocate?

[albanga]

Another reason not to use the parking method - it is confusing to get your head around.

Very much so!
So can I ask, what would be the best structure in the following scenario.

PPOR with offset (400k loan)
LOAN 1 IO with offset (300k loan)
LOAN 2 IO with offset (300k loan)

To keep it simple lets says the interest on the IP loans is $900 a month and also $100 expenses per month and let's say the recent received is exactly $1000 to evenly cover these costs.

My question is what account does the rent go into? And what account does the loan and expenses get paid from?

 

[Terry_w]

Very much so!
So can I ask, what would be the best structure in the following scenario.

PPOR with offset (400k loan)
LOAN 1 IO with offset (300k loan)
LOAN 2 IO with offset (300k loan)

To keep it simple lets says the interest on the IP loans is $900 a month and also $100 expenses per month and let's say the recent received is exactly $1000 to evenly cover these costs.

My question is what account does the rent go into? And what account does the loan and expenses get paid from?

You don't give me values or securities so I am guessing here

e.g
$800,000 value PPOR
$400,000 loan (non deductible portion) IO or PI with offset attached.
$240,000 for accessing equity. Make this a LOC. Use only for investments and never pay any money in other than the interest.

Once you have used the LOC money for an investment property you could split the loan and convert the used portion to a IO term loan. To get a better rate and better terms.

IO loans for the investments. Interest repayments for the IO loan to come from the offset account.

All rents to go into offset account on the PPOR - helps pay it off sooner and save tax. Wages also into this account.

 

[Paul@PFI]

Very much so!
So can I ask, what would be the best structure in the following scenario.

PPOR with offset (400k loan)
LOAN 1 IO with offset (300k loan)
LOAN 2 IO with offset (300k loan)

To keep it simple lets says the interest on the IP loans is $900 a month and also $100 expenses per month and let's say the recent received is exactly $1000 to evenly cover these costs.

My question is what account does the rent go into? And what account does the loan and expenses get paid from?

Close Offset on IP Loan 1 and Loan 2 as they are useless. Use offset on PPOR until that loan is repaid. NO EXCEPTION. Use offset for all rental income and paying outgoings, wages, savings etc.

 

[albanga]

Thanks Paul and Terry I think I do understand, obviously having the PPOR makes this much simpler.
Without the use of a LOC (say you have no usable equity) then from my understanding you would simply do my scenario as follows:

PPOR with offset (400k loan)
LOAN 1 IO with offset (300k loan)
LOAN 2 IO with offset (300k loan)

CLOSE IP Offset accounts because as Paul said they are useless.
Pay the interest on the IP loans from the PPOR offset. Pay all property expenses from the PPOR offset (keep receipts obviously).

All income (rent and wages) get paid into PPOR offset.
The loans would only become contaminated if I say used the PPOR redraw to pay the IP interest?