Hi,
I am very new to this forum so bear with me please !!!!!!!!!
My wife and I have got a home loan and a investment loan.
The way I was advised to set it up was the home loan is p&i and the investment loan is i/o.
We have also got a line of credit account which everything goes into which includes wages,rents etc.
Is this the right structure for investing or is the 100% offset account the better of the 2.
Thanks for any input.Yes P/I is correct for your home loan as the less you owe here the better as has no tax advantage, you can always re access the equity for investment purposes. I gather the LOC has been set up for the investment property; with out more info on that I would be guessing for its structure. Eg may have a small LOC to raise the cash for the I/P or the whole loan may be the LOC?
The idea of the LOC is you only pay interest on the outstanding balance and I/O which is what most investors look for. Not sure if you already have the offset available?
Wayne
Mortgage Adviser
Email [email protected]
http://www.alphamortgagesolutions.com.au
Refinace, Loan Consolidation, Owner Occupied or Investment Finance. Free Service we come to you!Gooday wayne,
Thanks for your quick reply.
When it comes to home loans the wife and I are dumb as dog poo.
I had a $56k line of credit attached to the home loan which everything goes into,wages,rent etc.
Deb and myself bought an investment property.
We used $28k of the $56k LOC.
The investment property was $115k plus $5K closing costs.
That $120k is a normal stand alone home loan i/o.
The other $28k attached to the home loan is a LOC.
It works similar to an offset account but it does not offset the loc $28k against the actual morgage.
Sorry if it sounds confusing because it certainly is.
I hope you can understand all of this.
Thanks karlmHi Karlm
Sounds like you are putting all your money into the LOC which was used to fund the deposit for the investment property. If this, this is not very good. You are mxing investment and personal money in the one account so apportioning interest at tax time will be hard. Worse, every $1 you put in you are reducing the deductibility of interest and your investment portion of the LOC will be paid off in no time, and you will not have any deductions.
Luckily it is a relatively small amount. The best way to structure in this situation would be a LOC and a 100% offset account linked to the home loan. Don’t pay anything except the monthly interest on the LOC and put all spare money in the offset to save you interest on your home loan.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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