Who's using IO AND P&I loans?

[Perp]

said he has been doing it for years with his investment loans

Wow, and this is a "loan adviser", terrific.

I think people think because the ATO doesnt query them at the time it is compliant.

Yes, lots of people don't seem to understand that our tax system is effectively an honour system, and the onus is on the taxpayer to know the rules and apply them correctly, or face the consequences when discovered. I hear all the time "but I've done xxx for years".

The ATO is not, when it issues an assessment notice, saying that we've completed our return correctly; they're saying "on that assumption that all the information you've given us is correct, this is your tax assessment". Quite an important distinction.

 

[Les]

Tiger makes a damn good point

IO on my PPOR. Would have done P&I if i had known interest rates would fall so low, but since this will eventually be an IP its not a big deal if we aren't paying down the balance.

A bit of deja vu there for me.... And a MAJOR reason FOR using an Offset account rather than paying off a loan. (Thinking back to my old BFO thread here).

Of course, Rolf's "flexibility" comment is another major reason. For me, Offsets and IO "tick ALL the boxes".

Regards,

 

[VYBerlinaV8]

I have 5 property loans (including my PPOR), and ALL are P&I. I am fortunate in that I have strong cashflow due to a high paying job, and figure that since the difference in payments between IO and P&I are small, that I'd rather be reducing my future interest liability.

 

[Y33]

You can always go IO with 100% offset as mentioned but set an amount when reached and if you go over the extra you can put towards paying off the loan. Most IO allow either 5% or set amount that can be paid off.

Virtually works the same was as a PI but you choose when you make the extra payment.