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Thanks Jamie, that's a great Idea.
I guess if i do decide to purchase a PPOR later down the track, i can use that offset from the 1st IP and have it negatively geared, which i otherwise wouldnt be able to do if i took out a new loan soley for a PPOR.
Hi Jamie,
i have sent you an email, i would love a copy of your IP analysis spreadsheet.
thanks mateThanks for your help Terry, its really appreciated.
Thanks Terryw, that makes everything so much more clear. i really appreciate you taking the time to help me understand. Many thanks.
Thanks Terryw, that makes everything so much more clear. i really appreciate you taking the time to help me understand. Many thanks.
Terryw wrote:The savings on a 100% offset account and IO loan will be the same as a PI loan. Providing you are not tempted to spend the cash.Thanks for your help and patience, im new to all of this.
So once i use my entire savings for a deposit on an IP, each week when i get paid, i deposit as much as i can into the offset, and pay just the minimum interest repayments needed on the IO loan itself until iv completely paid off all interest. Is that how it works?
Terryw wrote:The savings on a 100% offset account and IO loan will be the same as a PI loan. Providing you are not tempted to spend the cash.Thanks for your help and patience, im new to all of this.
So once i use my entire savings for a deposit on an IP, each week when i get paid, i deposit as much as i can into the offset, and pay just the minimum interest repayments needed on the IO loan itself until iv completely paid off all interest. Is that how it works?
Terryw wrote:But consider the tax consequences.The effect is interest on the full $300,000 is deductible. Saving you roughly $3,000 pa in tax.
The saving on the overall loan itself and having it gear positive outweighs a tax saving of 3kpa though?
Terryw wrote:But consider the tax consequences.The effect is interest on the full $300,000 is deductible. Saving you roughly $3,000 pa in tax.
The saving on the overall loan itself and having it gear positive outweighs a tax saving of 3kpa though?
Thanks for your help Terryw
Thanks for your help Terryw
JacM wrote:Always IO loan with an offset account. Always pay the interest as required, and funnel extra money into the offset, which holds off the interest. Then you either leave the money in the offset to pay the property off one day, or pull it back out to use it as a deposit on another property.Im a little confused, Using any loan repayment calculator, i would seem to save alot of money paying off interest+principal and forgot about the IO loan and offset account. Paying off principal + interest asap means my property turns to positive gearing much quicker which will help me afford a 2nd IP down the road?
JacM wrote:Always IO loan with an offset account. Always pay the interest as required, and funnel extra money into the offset, which holds off the interest. Then you either leave the money in the offset to pay the property off one day, or pull it back out to use it as a deposit on another property.Im a little confused, Using any loan repayment calculator, i would seem to save alot of money paying off interest+principal and forgot about the IO loan and offset account. Paying off principal + interest asap means my property turns to positive gearing much quicker which will help me afford a 2nd IP down the road?
Thanks Catalyst and LH for your help, i really appreciate it.
I have a few other questions
The scenario is i decide to go ahead with an IP worth $380k whilst working fulltime (50k gross) but still living at home with my parents with only minimal expenses.
1- How much Deposit should i aim for?
2- Would an IO loan be best or should i try and reduce principal ASAP?
3- Do i need an offset account?
4- Is there anything else that i need to be aware of?Thank you in advance.
Thanks Catalyst and LH for your help, i really appreciate it.
I have a few other questions
The scenario is i decide to go ahead with an IP worth $380k whilst working fulltime (50k gross) but still living at home with my parents with only minimal expenses.
1- How much Deposit should i aim for?
2- Would an IO loan be best or should i try and reduce principal ASAP?
3- Do i need an offset account?
4- Is there anything else that i need to be aware of?Thank you in advance.
Thanks for your response Catalyst,
The only thing is you have calculated the Managed Fund incorrectly.
Interest paid monthly on a 60k account over 15 years works out to be $132,000 assuming i don't make any contributions to the fund at all.You have also assumed that housing prices will double in 10 years.
if the property market is flat or only slightly positive, the strategy is no better than putting the deposit in the bank, term deposit, managed funds, shares, ETF's ect…
Thanks for your response Catalyst,
The only thing is you have calculated the Managed Fund incorrectly.
Interest paid monthly on a 60k account over 15 years works out to be $132,000 assuming i don't make any contributions to the fund at all.You have also assumed that housing prices will double in 10 years.
if the property market is flat or only slightly positive, the strategy is no better than putting the deposit in the bank, term deposit, managed funds, shares, ETF's ect…
