Morning all,
With the excellent help of someone here I have recently moved into a St George Portfolio loan with 3 separate sub accounts.
The first sub account, variable interest rate, is for my own home (owner occupier). the second sub account, fixed interest rate is for my own home again and the third is for an investment property.
As a noob to LOC loans I am just after advice on the best way to manage the loan and maximise the facility. I have spoken to St George who didn't really add much info and basically pointed me to their website.
I understand this:
- I get all my income, ie salaries and rental income from investment properties, paid into sub account one to minimise the amount owed here on the variable component of my own home.
- I then charge all monthly expenses where possible to my credit or debit card, I use Amex currently
- I arrange to leave as much money in my sub account 1 for as long as possible and then pay the Amex card as late as possible.
My questions are these:
- How do I know the maximum amount I need to pay (or leave in my account monthly) to meet the minimum payments ? I emailed St George on this and they didn't reply
- Do I need pay monies into each of the 3 sub accounts or can a total amount just be paid into sub account 1
- I note interest has been debited from all sub accounts. However only the primary sub account has available funds in it, the other 2 were fully drawn. Therefore the total available to me in sub account 1 has been reduced but only by the debit interest for sub account 1. The balance owed on sub accounts 2 and 3 has just increased by the amount of interest debited for the month.
Is there something I should be doing differently ?
Thanks for reading and belated Happy New Year
I have this loan product currently.
You can set up for automatic funds transfers from the Primary Account to all the sub-accounts separately, and they automatically pay the correct mount of interest each month.
It sounds as though only one sub-account transfer is currently set up. It would be adviseable to do a manual transfer for the other 2 sub-accounts asap, then give St.G a call to arrange the automatic transfers.
Hi Marc
Thanks for the reply.
As you recommended I have manually transferred an amount from sub account 1 to cover the debit interest taken from sub account 2 and 3. These are now back to the original amounts.
So,you have answered one of my questions, I have to pay the minimum amount, ie interest only for sub accounts 2 and 3 whilst I pay as much as i can (or leave in as much as I can) into sub account 1 ?
Cheers
Yes, because it is essentially a line of credit, you are only required to make sure the balances of your LOC are under the limits.
So, you can basically just keep paying only the interest and any fees indefinitely.
In my opinion, you should go hammer and tong on the part of the loan that is for the PPoR as this is not tax deductible, and keep paying the minimum interest on the IP sub-accounts until the PPoR loan is gone.
Have you got one annual fee being paid for all these sub accounts as it is cheaper than three seperate bank fees for the three sub accounts each month. Pay each account seperately with auto redraw . Decide if you want to pay interest charged each month plus bank fee or Pay slightly more to slowly pay off loan. Interest charge will be on first statement you get.
I have a St George LOC and use an automatic payment set up from my internet banking. But I also have one annual fee paid.thanks guys
duckster, yes I do have a single annual fee. I will set up an auto redraw ( I assume you mean a scheduled transfer) to cover the payments.
Thanks for your help
I have recently read a PBR (private binding ruling) from the ATO which allowed the capitalisation of investment debt as a short term measure to fund the repayment of OO debt.
In other words all income into the home loan and all costs including interest on investment capitalised and yes the interest on the interest allowable.
You would have to get your own PBR ruling but my 'suits' have all said that as long as you follow the precedent all should be OK.
All you are really doing is converting you non-deductible debt into deductible debt very quickly and of course saving a pile of cash in the process.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
