Hi all,
Our situation is this. We have excess money from each pay.Currently we have been putting it into our equity manager LOC. This LOC was set up for investment purposes on an interest variable rate, currently at 7.32% We have no PPOR loan. We own our own home and the LOC was done against this property.
We have no personal debt or credit card debt. We have several IPs that are on higher interest rates, and business loan for commercial premises at 7.55% fixed for 3 years ending June 09.
Our question is this? Should we keep paying the LOC first or should we put it into something else. (A higher rate of interest loan maybe?) Which would be the best loan to pay into first…? We assumed the LOC because we can redraw funds anytime we want to. We have also set up to pay weekly, principal amounts extra on top of the IO amount on other loans. Any help is much appreciated.
Thank you
Dianne Burns[happy3]What are your plans for the money?
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Probably a 100% offset account would be better as there are no tax issues when withdrawing money. If you use a LOC, any withdrawals are considered new borrowiings and the interest may not be claimable.
Terryw
Discover Home Loans
Parramatta
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Hi,
thank you for the comments.
The excess money will be used for investments…Redraws are also used for investments. I would like to build my art portfolio as well And personal spending is paid out of savings.
Cheers.
DianneI agree with Terry. Putting it in a 100% offset account will help to lower your interest repayments. And you can also draw out the money and use it as a deposit for another property.
Or. If you have a dump of a property you could reno it up lots and then rent it out at a higher price. you will also gain immense equity from these renovations.
Christopher.
Draconis – The interest savings using an offset account or a LOC are identical so there is no benefit in using one over the other.
The LOC was set up for Dianne for a reason and was appropriate at the time given other reasons which have not been posted.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner.
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Hi,
I read in the paper on the weekend that if you have a $250,000 loan with an offset account you would need a mininum of $13,000 in the offset account at all times to save on interest. Most people dont.
This would be costing you fees if you had under this amount in your offset account.Dom [biggrin]
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