I hear people suggesting offset accounts for investment properties. My understanding is a offsett account is a savings account thats balance is effectively taken off the interest charged on the property. To me this would be bad as you want to technically pay more interest in order to negative gear. What would be some ideas for my situation. ( I understand any replies are just comments and i should seek financial advice).
$307,500 INterest only locked at 7.25% for five years
The amount i borrowed was property plus stamp duty.
Five year lock in can be changed at the moment if i want.
A savings offset account or anything of that nature has not been organised yet.The loan is in my name.
My goal for the property is for capital gain with little financial burden until i see that which after crunching the numbers seems to be what will happen.
I have a PPOR worth $350 and we owe $200. I plan on paying all extra available funds of this one.If you have a PPOR loan, then you should have an offset account attached to that as the interest is not deductible. Pay this down first.
Once you have paid off your PPOR debt, then you should consider a 100% offset account against an investmnet. But as you say you will not be ‘earning’ much as tax must be considered, somaybe just use the offset to get wages deposited etc, and then reinvest in a higher returning area.
Terryw
Discover Home Loans
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Consider the effect if the investment is positively geared. Not everyone is after negative gearing .
Duckster Financial Services
http://www.ducksterfinancial.com
Helping to make the great Australian Dream come true !Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
The good thing about using an offset account is you save interest whilst the extra money sits there, and yet is felxiable if you change the purpose of the loan. Eg if you convert your PPOR over to an investment and you have the extra money sitting in the offset you can take it out for your next PPOR or car caravan etc
Wayne
Mortgage Adviser
Email [email protected]
http://www.alphamortgagesolutions.com.au
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