Paying Off Investment Loans

Put any excess cash you have into an offset account against the loans so you don’t pay down the loans but effectively reduce your interest repayments.

From what I understand by keeping funds separate is makes the split between personal and investment easier at tax time.
If you put the money to the investment loan, then redraw it for personal use, you can’t claim that portion of the interest as a tax offset.
If you put the cash in an offset account, you get the benefit of less interest whilst it’s there. But when you withdraw for personal use you then don’t need to worry about percentages between the 2, it it is clear what is investment funds and what is personal.

There are a few posts through this site that explain it better than I have, but that’s my understanding…

I would recomend IO loans with no extra repayments but putting all cash into an offset account.

Never pay down investment debt while you do not have a main residence – otherwise you would have to borrow more to buy one = bigger non deductible debt.

hang on – you cannot just redraw money. If you do that you will end up with a mxied purpose loan.

Damage not so bad – you have just tied up $20k thats all. If you have no cash and need $20k, for example, you would have to borrow it and then the interest on that would be 7% pa or whatever your loan rate is = so about $1400 pa in interest. So essentially, if you were to buy a place to live in you would have $1400 pa less in tax deductions each year.

Yes. But just make sure the bank won’t class it as a missed repayment and default

And did you check with the bank that stopping payments is ok?

Hi

I am in a similar situation, purchased ppor 7 yrs ago moved out 2 yrs ago to rent out and moved to company house rent now pays for itself p&i and have $280 owing worth about $550 with about $90 k in offset

. Also brought another one from equity loan of $125 k leaving about $18 in kitty for emergency. Balance of 80% loan from another fi for $355 this one neg geared and putting in a couple of hundred a week @ io

We have no personal debts only a cc that is used to live on and balance paid every month religiously.
Though we need $20k – 40 from offset in the near future for personal use

Do I use the $50 in offset to buy another ip or do I keep putting all excess funds approx $2 k per month to offset and then pay off old ppor in about 5 yrs or so, as eventually one day we plan to either move back or use income to start paying off others?

Getting confused about what to do, craig 123 hope you dont mind me asking on your post but these guys gave good comments on yours

Thanks

Yeah sorry to sound confusing Jamie that’s right, the goal is to eventually own the original ppor currently being rented out and move back there when it’s time to retire, (10 yrs or so) to answer your question no we don’t plan on buying another ppor. My main question is do I utilize the extra $ we have been able to pay into the offset by purchasing another ip or keep paying down the loan?