Think of a line of credit as a great big credit card i.e THE BANK'S money – you have a limit, secured against your property, and you need to pay x% of the outstanding debt each month.

An offset account is YOUR money in a savings account.

Say you have a mortgage of $100,000 and a balance of $10,000 in your offset account. You only pay interest on $90000 of your mortgage balance.

I could be wrong here, but AFAIK the only way you can claim the interest the trust is paying (kind of) is if you borrow money to purchase units in a unit trust. The trust would then use the capital you have given it to purchase the property. Because the money you borrowed is for investment purposes (you've invested in the trust) you can then claim the interest on the borrowings.

This is of course dependent on your ability to get finance of the magnitude you are talking and would affect your ability to service the second loan you speak of.

Bear in mind any interest the trust pays is tax deductible within the trust, but (again AFAIK) any losses have to stay within it but can be claimed against future profits.

Well said.

Grew up there actually…

It's predominantly an old commission area.

The area north of southern rd, between the creek and waterdale road was the olympic village for the 56 games. Unfortunately now, it's a loooooong way from it's former glory…

If I were you I'd be sticking to the area bound by bell street, southern rd / murray rd, oriel rd and Liberty Parade.

Check out the other side of Bell Street, in what is now Ivanhoe, to see whats being done there. It may take a few years, but I wouldn't be surprised if it happens in W. Heidelberg, starting with that pocket. There is a fairly high sudanese refugee population in the area as of late though…

They're talking about changing Bellfield to Ivanhoe, so that will bump prices up there and force people the other side of bell street. If you can afford bellfield I'd be looking there… Not quite as dodgy as w. Heidelberg and with better potential IMO. Close to the hospital you may be able to rent it to a couple of nurses or something… Check out the areas bound by Banksia street, waterdale road, bell street and Liberty Parade.

Good luck!

Thanks for the clarification Scott No Mates. I was aware that it's more a commercial RE tool used over logner periods and that there would be limited if any demand in the residential market. Just thought I'd throw it out there as a desperate time / desperate measure last throw of the dice thing

Thanks again

Is your wife not working a short term thing? Can you cut back on your lifestyle somewhere? If so…

How about trying the hard and fast rules first…

Contact your institution. Can you refinance? Can you reduce or put a stop to payments for a couple of months until your wife is back in work? Most institutions will be able to do something if you're having problems and you tell them fairly soon after they begin. The quicker you do it the more room you'll have.

Can you get a cheaper rate somewhere else?

Are both your mortgages with the one lender? If not, shop around for what banks / financiers will do for you if you bring both of the loans. May get you nowhere, may get you somewhere…

It doesn't sound like this is going to be a long term situation – I'd investigate all options before selling the IP… Remember, the last thing a bank wants is their customers out on the street – everybody loses…

AFAIK You can only claim interest deductions if it's for investment purposes, HOWEVER (and I stand to be corrected) you could possibly LEASE the vehicle in the company name and claim THAT as an expense, though I'm sure there'd have to be some clause stating that you had to prove it's for business purposes…

Anyone with a bit more knowledge???

Perhaps best to talk it over with your accountant…

I'm personally looking at getting in to the market, albeit using high deposits in rural areas to make my properties CF+ – it's a low growth option but low risk as well…