We have some spare cash which we have saved recently ( about $6000). Which would we be better off financially to do at the moment. We don’t have a loan on out PPOR:
(1) Put the money into our IP loan ( which is fixed at 7.24%)
(2) Put the money into another IP loan ( variable at 6.45%)
If one of the 2 above, should we use the money to pay off some future interest and hence claim as a tax deduction for the forthcoming year or just pay off some of the loan (which isn’t tax deductible but we will be saving interest)
(3) Invest into something completely different
Which do you think???I would pay off the IP No. 2 where interest rate is variable which I believe is redrawable anytime if you need the money in the near future.
If you pay off IP No. 1 with fixed interest rate then you won’t be able to redraw.
Once you park your money in IP No.2 then you seek opportunity where you can get better return than 6.45% and access the risk.
Kind regards
Chan Dollars
[Retire Young, Retire Rich] [strum]Stingray, do you have an offset account? I’m guessing not. Could you look into setting one up? then you could leave the money there, and if you redraw to spend on lifestyle from an offset it won’t matter, but from the loan it will…
Alternatively put it in a short term Cash management account and look for property no 3!
Cheers
MelHi stingray,
6k[happy3][happy3] ???
Take it to the casino and put all on red …
..
If you win all on black.
[specool]henry
I would be wary paying off some of the capital on the basis you can redraw the funds at a later date.
You certainly might be able to do so but would the interest then be non tax deductible!!!
Mel is right an offset account gives you the best of both worlds.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
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