MRW wrote:

I'll show my ignorance here.
Would there be any reason to have an offset account against an IO loan?
My understanding is that an offset account against a PI loan means you'd be paying off more of the principle as the amount in the offset gets subtracted from the loan amount before the interest component is calculated? (That's not worded very well but hopefully makes sense to someone )

no offset account:
interest 7%
loan amount $500,000

interest = $35,000 pa
$1346 per fortnight

if the repayment was $1500 per fortnight
$1500 – $1346 ($154) would come off the principle.

with $100,000 in an offset account:
interest 7%
loan amount $500,000
so interest calculated is $500,000 minus
the $100,000 in the offset ($400,000)
interest = $28,000 pa
$1077 per fortnight

if the repayment was $1500 per fortnight
$1500 – $1077 ($423) would come off the principle.

—
Mark

You would simply save interest each month – which means less to pay.

(unless you had a St G IO loan with offset and then you may find they will reduce the princple)

Why would you want 20 offset accounts?

Imagine the administrative hassles of filing all the statements.

I don't think it has sunk in on how they work yet

I think you misunderstand how offsets work. One offset account only works against one loan. So the money in offset A will only offset loan 1.

That sounds right. the GST would have to be included in the market price which someone would pay and so in reality it is the seller that actually pays for it. although technically it is the buyer.

Why not! I don't think there is any standard. Its all up to your imagination and negotiating skills.

Its up to you, but you have to be realistic.

If you offer a $1 option fee with a term of 6 months – there is no incentive for them.

If you affer $3,000 with a term of 6 months and a strike price of $350,000 they will be thinking they can keep the $3k if you don't purchase, but will be down more than this in interest paid on the loan.

If you offer $10,000 then it is more of an incentive to them, but a bigger risk to you as if you don't purchase you have lost a fair bit.

etc

I would think it won't become your main residence until you move in. So any growth in value during this time may be subject to CGT – but how much do you expect it to grow in 4 months?

I've purchased 2 cars on credit cards. Firstly, you don't want to pay the fee – naturally. So don't mention it to the sales person. Go in there and negotiate. Tell them you can pay in full straight away. When it comes down to paying just hand over the card. They will protest and say you need to pay the fee and you say, no that is ok I will come back next week when I get the cash. They won't want to lose a sale so will give in and say you can have it today with no fee.

I purchased a $20k car on one card and then transferred it to a new one with a 2.99% balance transfer rate for the live of the transfer.

Its a bit of a hassle and risk, but can be done.

Also watch out as it hurts your serviceability.

Thanks Richard.

I would suggest you look at selling the IP. Do the sums. You may have to pay CGT, but this will be small and releasing equity would allow you to pay down your PPOR loan and saving you heaps of non deductible interest.

You can then get back on track quickly and then reborrow some money on the PPOR with a LOC and purchase a new investment. Net result is lower PPOR loan and higher IP loan saving you $$$ in tax each year.

Alternatively you could talk to your tax advisor and set up a LOC and then use this to pay the interest on your IP loan and use all the rent from your IP to pay off your credit cards. You need to set this up properly to work.