sometimes expected things happen. You may do all that work and then lose your job just before settlement and can't get finance. You may get sued by someone and have a bad credit report etc. If you can't settle then all the repairs stay with the house, There may even be some sort of delay with finance and you miss the deadline to settle and the greedy vendor sees the increase in value and fails to give you an extension etc. You may forget to notify the exercise of the option by the relevant date etc. many things can happen.

There are a lot of books out there on options for shares, but not much for property. What there is for property is mainly legal type books such as:
Principles of Land Contracts and Options in Australia Author:   C ROSSITER
or
The Law of Options and Other Pre-emptive Rights Author:   Donald Farrands

Hi

You will have to apply for a variation to change to IO and they may charge you a fee, depending on the product you are currently on et.c

hi Darren

You can do it on a PPOR. But you need to be careful there.

Best with an eg again.

Say your PPOR loan was for $100,000 and you had $50,000 in the offset. You would have 2 choices if buying an IP

1. use the $50,000 in the offset as a deposit.
or
2. pay the $50,000 into the PPOR and then reborrow it for the deposit for the IP.

2 is much better as the interest on the $50,000 will be deductible. ie your home loan is now $50,000 and  you have reborrowed $50,000 for investment.

With option 1 your home loan would still be $100,000 and you would be paying interest on the full $100,000 because the deposit for the IP wasn't borrowed.

So why use an IO loan with offset for a PPOR?
You would be no worse off in terms of interest by using the offset and IO, but you have the flexibility to pay the loan down if you need to.

After a few years you may want to upgrade to a bigger PPOR and keep the existing one as an IP. If you had paid down the loan all your money may still be available as a redraw, but the interest on this money when taken out would not be deductible. But if you have used the offset option the loan won't be going down so all the interest on the full amount would be deductible if you converted the house to an IP.

Does this make sense?

With an IO loan you can also pay extra off it at any stage. So you could even keep the loan IO and pay the equivalent to PI if you wished to. if you were going thru a tight period you could reduce the repayments (if you had a PI loan you would need to reapply to do this). The repayments are lower than a PI loan so you can afford more investments.

In that case it is a bit different.

Paying down debt is good, but once you pay into a loan your money cannot be taken out again (eg redraw) without tax consequences.

So I would suggest you set up a 100% offset account on at least one loan and continue to pay IO and then save all the extra money in the offset. You will continue to save the same amount of interest as if you paid into the loan, but your cash will be available later on.

an example may explain it better.

eg. you have a loan of $100,000 with $50,000 cash windfall. You could pay the $50,000 into the loan and reduce the balance to $50,000. Or you could put $50,000 in the offset and have a $100,000 loan. Either way you will be paying interest on only $50,000.
say you then decide to buy a place to live in. You need $50,000 deposit. You could withdraw it from your loan. But the interest on this $50,000 would not be deductible. You would have a $100,000 loan with only $50,000 being deductible.

But if you had used the offset you would just withdraw if from the offset account. The loan would still be $100,000 but interest would be charge on the full $100,000 now. But in this case the full interest on the $100,000 is deductible.

can you see the difference?

I have used options in Victoria. try Mcdonald and partners solicitors, or Steve's old mate solicitor Lewis O'Brien.

look up the requirements. i think you will find it says something like you must move in within the first 12 months and live there for at least 6 months.

why buy something like that?

being hard to finance means hard to sell which means low capital growth

I just wrote out a long reply to a similar post here:
https://www.propertyinvesting.com/forums/getting-technical/finance/4330095?#comment-199355

It may apply to you too, or some of it.

Selling and buying again costs a fortune.

Since you are going to be having such a large loan on the new one you may want to consider doing something like moving in and then out again and renting it and using the 6 year CGT exemption rule to avoid CGT but allowing you to claim all depreciation, expenses etc and thereby saving you a fortune in tax. Setting it up properly and thinking outside the square may enable you to have your cake and eat it too.

i would say generally no. You want to buy something with a large component of land. Land appreciates while the structures on them slowly depreciate. So I avoid apartments altogether.

But sometimes you may get a good yield out of an apartment and they can still go up in price over the short term.

Probaly like this.
$200 pw is income. = $10,400 pa

You will be able to claim expenses too. This will probably depend on how much of the apartment you are renting out as a percentage. If you are renting 1 room of a 2 bedroom apartment, then you could probably claim half of all expenses including:
interest
rates,
insurance,
body corp fees
accounting
etc

Then you can also claim non cash expenses such as 20% of loan establishment costs (incl LMI) over 5 years. Depreciation on building and depreciation on fittings (such as carpets, hotwater systems etc). You should get a quantity surveyor to assess the values of all these things as they can add up.

Futher possible deductions would depend on how the household is set up. If the tenant watches your TV you could also claim a percentage of that (depreciation). Pots and pans, furniture etc too.

There may be other things you can claim as deductions outright like toilet paper if you supply it. internet, electricity etc.
(remember on 50% on everything).

All these expenses should add up to much more than you are receiving in rent, so you will have a loss. This loss can offset other income so you should save tax.

But bear in mind you will lose the CGT exemption on the part you are renting out so it may end up costing you more in the long run.