Hi Prestons, I'll answer this for Steve as it's just maths. The Future Worth Factor is just 1.0428 to the power 17, ie (1+r)^n where r is the inflation rate divided by 100 and n is the number of years. This comes to 2.039 (you need an {x to the power y} button on your calculator).Present Worth Factor = 1/(Future Worth Factor) so 295k in 17…[Read more]

Thanks Kenny and Michael, I really appreciate the effort you've put into your responses. I'll look into getting a private ruling, or maybe just split my loans and plead the private ruling above as you say Kenny.   I already have 17 accounts of various flavours, so the collating of statements is already a bit unreal, but it would be worth it (…[Read more]

Thanks for those links Kenny. All the examples seem show pretty clearly that I have to apportion any payments according to the investment/private ratio, but one paragraph was particularly interesting:Second Exception – Refinancing mixed purpose debt 18. A taxpayer may choose to refinance a debt outstanding on a mixed purpose sub-account by…[Read more]

Thanks for that Michael. I've always been given that impression by my accountant, ie that everything has to be proportional. I would certainly like to be able to just kill the private half. Perhaps when I bring my shares back out of super it would be appropriate to apply that capital back to the half that was used to fund the shares…[Read more]

mortgagedetective wrote:
The ATO's position is that you don't need to have a separate loan account so long as you clearly apportion the interest in the LoC (or any other loan account for that matter) based on what the principle balances were used for.

Mortgagedetective what part of "it's still 50% investment and 50% private" didn't you u…[Read more]

Not exactly Kyla, it's still 50% investment and 50% private. If you make any payment of principal, say 50k, then 25k is considered to be for the private half, and 25k is for the investment half. You have to distribute the payment exactly according to the proportions of each debt, so the only way to clear out the 50% private contamination is to…[Read more]

Kramulous wrote:
I've been wanting that large TV for the last 4 years but can't quite bring myself to spend $4K when that's almost a $1 per day I would be missing out on.  It's quite sad, I think of everything that way now

K we also waited for years before getting our new LCD Sony Bravia (only 42") but we just used Harvey Norman vouchers from…[Read more]

Just remember kyla, that if you're using an LOC to fund the deposit on your IP that is eventually going to become a PPOR, then keep that LOC as a separate sub-account to any other LOCs, so that you don't end up with contamination of private & investment in your LOC. I know you can only afford a small LOC now, but later you'll have the opportunity…[Read more]

Hi Fword, just a slightly different train of thought. There isn't much difference between an IO loan and a P&I loan in the first few years if you've set it at a 30 year term. If you're going to live in it forever after renting it for a few years, then there's a lot to be said for P&I. It's just too easy to rob the offset account, and with P&I…[Read more]

Hi Fword, just a slightly different train of thought. There isn't much difference between an IO loan and a P&I loan in the first few years if you've set it at a 30 year term. If you're going to live in it forever after renting it for a few years, then there's a lot to be said for P&I. It's just too easy to rob the offset account, and with P&I…[Read more]

Hi Fword, just a slightly different train of thought. There isn't much difference between an IO loan and a P&I loan in the first few years if you've set it at a 30 year term. If you're going to live in it forever after renting it for a few years, then there's a lot to be said for P&I. It's just too easy to rob the offset account, and with P&I…[Read more]

Lisa that's completely fine with my lender. I tell them everything. The'll only be concerned about your LVR on each property and your debt servicing ratio (ie enough income relative to debt). They've never told me I have to stump up some cash if I have any lying around. I'm mainly limited by my debt servicing ratio after 11 year's growth.PS just…[Read more]

Lisa, I assume that if you're considering different lenders, then you don't have a pro package with SGB at the moment? It would be a bit ineffecient if you have two pro packages with the annual fee of $395.     I used to have three different lenders, but I've refinanced them all with WBC so I could qualify for their pro package. This way I pay no…[Read more]

That is confusing Terry; Westpac's is so simple: The formula is simply: daily Interest calculated for today is precisely: {(Yesterday's closing loan principal – yesterday's closing offset account balance) x (loan interest rate)/100 } / 365. Each of these daily contributions are added together at the end of the monthly cycle and then deducted from…[Read more]

I'm sure St George's offset account would be fully transactional Lisa, just as Westpac's is. (They are owned by Westpac after all). Their advantage package seems very similar to Westpac's (which I'm on as you've probably gathered by now). We also have a $395 annual package fee. I'm currently paying 5.11% which is 0.7% off their standard variable.…[Read more]

Hi Lisa, Westpac certainly has a fully transactional offset account. Offset accounts should be the only place all your private stuff sits. The LOC should only be used for investments. It's a great way to fund the 20% deposit required by the banks plus all the other costs, ie legals, stamp duty etc. It also can be used to fund extras along the…[Read more]

Kyla you can afford quite a nice new four bedroom home for 450k if you're prepared to live a bit on the fringes, eg Heathwood/ Forest Lake etc. It's still only a 25 to 45 minute commute to the CBD from Heathwood depending on the time of day (23km). You can also buy new 3 bedroom townhouses for ~380k at Durack for example (17km from the CBD). My…[Read more]

Kyla setting up the LOC is a good way to go. It's what I do. Your total borrowings will be the same if you set up an LOC. You can use the LOC to help pay for expenses etc. This should reduce your second loan and its LMI, and hence increase your borrowing power a bit. Paying LMI is fine in a rising market. As you say, it's much better to get in as…[Read more]

Hi Kyla, If you keep your LVR on your first IP to 80% then your total borrowing will be 80% of 380k = 304k. That means you can only increase your borrowings against that property (in the form of an LOC) by 12k. This can be used to fund the second. If you were to keep it under 80% LVR, you would only be able borrow 80% of 440k (assuming it va…[Read more]

Hi Gez, I agree there's no need for a savings account, but discipline isn't really relevant when comparing accounts (Richard). It's simply the best place to park any spare cash. I only use offset accounts. You really don't want any unnecessary accounts if you're paying fees (I don't pay any with my pro package) plus there's all those statements…[Read more]