Please bear with me as I explain our situation. I know it's pretty straightforward to some people but figures just aren't my forte.
We have just purchased our first investment property. We utilised equity in our PPOR to assist with this purchase.
We have three loans, our PPOR, the equity loan and the investment loan. Home loan is I & P and two investment loans are IO. We have an offset account attached to our home loan in which all of our income goes including rent, wages, etc.
We currently have around $10,000 in cash left over after the property settlements. Currently this is sitting in our offset account.
My mortgage broker suggested I should pay this money off our small investment loan (the one taken out against the equity in our PPOR) and then as payments related to our IP's are made from our offset account, transfer that money over. She believes this will make it easier to keep a record of expenditure against the IP.
However, I spoke with a lady from the mortgage centre from the bank we have the loans with and she said we are better off leaving this money in the offset account as it offsets our PPOR loan and would provide better value to us as this is non tax deductable interest.
Where should we leave these extra funds? Should we try to be paying the most interest on our IP loans as these are tax deductable?
Confused
Have added the diagram our mortgage broker drew for us in one of my further posts.
We have just purchased our first investment property. We utilised equity in our PPOR to assist with this purchase.
We have three loans, our PPOR, the equity loan and the investment loan. Home loan is I & P and two investment loans are IO. We have an offset account attached to our home loan in which all of our income goes including rent, wages, etc.
We currently have around $10,000 in cash left over after the property settlements. Currently this is sitting in our offset account.
My mortgage broker suggested I should pay this money off our small investment loan (the one taken out against the equity in our PPOR) and then as payments related to our IP's are made from our offset account, transfer that money over. She believes this will make it easier to keep a record of expenditure against the IP.
However, I spoke with a lady from the mortgage centre from the bank we have the loans with and she said we are better off leaving this money in the offset account as it offsets our PPOR loan and would provide better value to us as this is non tax deductable interest.
Where should we leave these extra funds? Should we try to be paying the most interest on our IP loans as these are tax deductable?
Confused
Have added the diagram our mortgage broker drew for us in one of my further posts.
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