Bacchus Marsh isn't a suburb of Melbourne. It's a town and part of the Moorabool shire. As far as industry goes there's not much there. There's orchards, a small quarry and that's about it. There's one tiny shopping centre to service the town and not much of a main st. The basic things are there if you need them though. One of the big things for bacchus marsh is The avenue of Honour but the government are cutting down all the trees to make room for the new bypass.

The town is serviced by a v/line train that goes through very regulary and the train ride into melb CBD is about 45 mins.

There are a lot of new estates going in around the maddingly and darley areas and the land size isn't too bad either. Only thing I would be concerned about it that there's too many houses being built. If you're thinking about buying and holding it might be ok but if you're looking at building and selling soon after look at it in the eyes of the buyer – would pay extra for a house that's not brand new, or build one of your own?

But in terms of paying 200k for a house and land, the phrase "you get what you pay for" comes to mind. If you're talking about the people I think you are I wouldn't build with them to save my life. The money you save by building cheap you have to spend on the house in the near future when things start to fall apart.

If I were to invest in bacchus marsh I would buy one of the older houses closer to town (possibly as a rejuvination project) as down the track land close to town will always be in limited supply, but in the outer areas there's lots of room to expand.

It’s all starting to make a bit more sense now

Going with what Sandra said how you can make extra principal payments in an IO loan, if I were to do that can the extra payments be redrawn upon? So putting in extra payments when possible to reduce the interest being paid then when funds are needed redraw on the loan or would an offset account be better for this train of thought?

What I’m still iffy about is that say we’re in a perfect world and interest will ways be at 8% (for arguments sake) so with a P&I the interest being calculated will reduce as the principle reduces. With an IO loan the interest beig calculated always stay the same becAuse the principle never changes so even though you may be saving money in the short term won’t it cancel itself out in the long term because the principle isn’t being reduced and interest being calculated will always be on the original amount?