Hi Terrw,

Are you able to advise what is the best way to structure accounts for people where you have a basic portfolio such as the follows and looking to be able to most effectively scale up and grow the number of investment properties whilst still making sure we are maximizing all tax benefits, lowest costs and having the flexibillty.

• 1 x PPOR
• 2 x Investment Property

I'd be interested to hear what combinations of Home PPOR Loan vs Investment Property Loan, Offset Accounts for each or Line of Credit account structure people should be creating. Moreover would be curious to understand how best to operate these. For Example like: place all salary in account 'X', all rental income in account 'Y', all renovation/bills/deposits for new IP from account 'Z'

Hi all, 

I've just come across this forum post as I have been racking my brains trying to also figure out the difference advantages/disadvantages of LOC vs Offset.

If I currently have an investment property with the accounts in a simple structure like:

• Loan Account (Variable Interest Only) – $200,000
• Offset Account (100%) – $60,000
• Equity available (due to a recent valuation but not yet drawndown) – $100,000

Offset

The way I saw it was that I have the flexibility of my $60,000 cash sitting in my offset account which is able to pay for a deposit on another property, renovations or any bills/expenses. Also Rental income could go directly into this offset account. This account became self sufficient so to speak without any intervention or transferring of more funds. In the meantime while nothing was happening at least it was reducing my Loan Accounts interest calculation base on effectively $140,000.

If I really wanted technically I could drawdown on my equity and place the new found cash into my Offset Account thereby increasing the Offset Account's balance to $160,000 and significantly reducing my monthly interest repayments to the basis of only $40,000.

LOC

However, similar to BreakEven, I met with a mortgage broker who advise me to use the $60,000 to pay down the loan account to $140,000 and then open a new line of credit account for the $60,000 + $100,000 = $160,000. I'm truly still puzzled why this would be a better choice? It seems that now my interest is calculated on a much higher loan base of $140,000 + I don't have any more money left in my Offset account and all i'm left with is a Line of Credit account of $160,000 which I may or may not use but it has no interest advantages while sitting there.

How is this any better? Seems worse that I'm paying so much more interest now.

I must be missing something significant here.

Regards,

VeryConfused