siewlinParticipant@siewlinJoin Date: 2012Post Count: 19
hi i was thinking of putting all my salary into offset account for this IP , reducing the amount of interest rate repayment will increase my cash flow. Is this a good idea? Thanks for sharing !Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539TerrywParticipant@terrywJoin Date: 2001Post Count: 16,173Jacqui MiddletonParticipant@jacmJoin Date: 2009Post Count: 2,539
To more clearly explain what Terry mentions above:
Let’s say you have a mortgage (aka debt) against a home you live in (commonly referred to as your PPOR, your Primary Place of Residence). Let’s say you also have a mortgage against an IP (Investment property). Let’s say both these mortgages have offset accounts under a circumstance where money in the offset account assists with reducing how much debt balance interest is charged on (usually this circumstance is the loan being on a variable rate rather than fixed). If you could choose which offset account your salary and other spare cash should go into, then your money is more powerful in the offset account of the PPOR (or other non-deductible loan). This is because the mortgage interest on this loan is not tax-deductible. As such you’d focus on debt reduction on that PPOR loan before focussing on debt reduction on an IP loan.
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