Thanks for all the helpful advice.

I will do my due diligence when it comes to researching reputable companies and ensuring I get independent rental appraisals/valuations also.

Dazz do you mind telling me which company you used and are you happy with the end result?

Thanks for your advice Terry.. Do u ever deal with St George or Bankwest? Are there any benefits around those portfolio loans where u have sub accounts, I noticed a few banks offering these for investors?

Thanks Richard, will check it out. CBA are meant to be bringing out a fully transactional 100% offset account but its been put on hold til April 2012. Can you get better deals than if I was go into the ANZ branch?

Hi Terry – I looked into other banks offset accounts and they are different to what I am used too and all alot more flexible. I will go with your way of structuring now I am aware of how I can use them more effectively. I actually emailed the General Manager at Mortgage Wealth at CBA who look after the new products and they are bringing one out but not until April 2012 as they are also implementing major changes with the home loans and loan packages available. This actually works in perfectly as my fixed HL rate comes off in April 2012. The reason I was never a big fan off the offset option was not being fully aware of what was out there in the market so I am really glad you gave me your opinion.

Appreciate all your help Terry.
<br /:)” title=”>:)” class=”bbcode_smiley” />

Jacqui

Yeah if I was ever to move out of the house I am living in I would stop my salary/rent from going into the loan and have it going into a normal transactional account or new personal mortgage. I will check out what other banks have to offer in regards to offset accounts as they might offer more flexibility than the one I am comparing it too.

Thanks for your time Terry, I really appreciate it.

No I was going to draw a new LOC up to 80% of the value of my owner occupied home for the 20% deposit on the IP so I can still claim tax benefits due to the purpose being for an investment property. I will check out other banks offset accounts to see how they differ. The one I have looked into sounds difficult to use. You can direct debit the offset account for the monthly repayment on the one I have.

Thanks for putting up with me Terry. I like to hear your opinion when it comes to finance matters!

Thanks for your help Terry. I'm sorry to be drilling you with so many questions but this topic is doing my head in!! I keep contemplating the pros/cons of both options.

What term do you suggest your clients  take out when going IO? If i was to sell prior to the maturity date of the IO period would there be a ERA if I took out a standalone SVR IO loan?

When using the 100% offset – the bank I am with at the moment your MISA account has the same BSB and AC no as your HL so how do third party transfers differentiate between the 2? There is also restrictions on minimum deposits of $500 and a minimum of $1000 to be in the acc prior to it offsetting any interest – where all funds deposited into a LOC offset the interest.

I was swaying towards the LOC due to other successful investors recommending it but also due to the flexibility it has- the ability to be able to take out a slightly higher limit to work as a buffer for any expected emergencies – untenanted periods/repairs etc. The interest is all tax deductable so I wasnt too fazed on paying an extra 0.10% above the SVR.  I also wanted to keep things as simple as possible and I am a little turned off getting a MISA + HL every IP rather an just one HL. I was only planning on drawing on the LOC for IP expenses – repayments/insurances/rates etc. I would also get stung with DEF of $700 if loan was repaid /refinanced within the first 4 yrs where there is no penalities with a LOC.

The main issue I'm worried about is what kind of difference it would have on my servicing compared to a 5 or 10 year IO loan?  
I plan on building a large property portfolio and I dont want to be restricted by the loan I chose. I might speak with my accountant regarding tax implications to find out what she recommends also.