If one was very disciplined is it better to have your ppor loan IP with offset or P+I with offset?
Reason I ask is because I dont see how you would be any worse off with IO offer and it does seem to offer greater flexibility (better cash flow and access to money). If serviceability ever became an issue in your bid to purchase more properties you can always drop some money from the offset into the loan to reduce the balance.
any thoughts?
julie
Yes, interest only does give you more flexibility.
It wouldn’t improve your serviceability by repaying extra becuase you would still have access to these monies via redraw and the lender would consider this.
Cheers
Stu
When tax time comes around you can make deductions on all of your repayments with interest only. Rather than just the interest portion of PI. When financed with PI your principal decreases each year because you are paying off… dah! However, with interest only you dont pay anything off your interest, so the interest is always going to be calculated on the same principal, meaning you can make a tax deduction on the entire payment as opposed to only part with PI.
make sense? i’m not sure… basically IO is recommended for taxation purposes. It can increase the deductions you make and at the end of the financial year can sometimes turn a negatively geared property to a positive one.
Can you get an I/O loan on your PPOR?
I always had the impression that this was for investments only.
James
This issue seems to come up often.
You can have IO on your PPOR (line of credit) – but I have absolutely no idea why you wouldn’t to pay it off (tax deductible)!!!
Sure your cash flow is better – because you have a loan that you are not paying off..[evo]
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