Hi All, I'd like to know your opinion on my situation. My wife will soon be going to Maternity Leave and we have the following: 1. PPOR under wife's name, 240k owing (property valued close to 1m) - P&I Loan - Variable Loan 6.09%($1800/m) 2. IP under my name, $460k owing (property valued close to $700k) - P&I Loan Fixed 1.98% until 2025 ($2200/m) We may purchase and move in the future so I was thinking if it's possible to do the current PPOR to an interest only loan for 5 years and have money in the offset with the same amount as the current loan ($240k) and not have any repayments for the next 5 years? We can then take that money out in the future once we move and effectively not have paid the loan down so there are claimable interest for Investment Purposes. Use that money to place into our new PPOR offset. Is that how it will work and if so, which banks would allow that?
Certainly possible, but be mindful most lenders dont like IO on PPOR loans and the rates are higher, which may be a moot point if you are fully offset ta rolf
Hello, just reviving this post. If we were to go IO on our current PPOR which would be fully offset (and we get a lender who will allow this, thus $0 monthly repayments) we are able to save a fair bit of money to go towards another property. However, there are a fair bit of articles suggesting to pay off PPOR asap as it is non deductible debt. Is the strategy I'm looking to do viable in the long run or am I creating a fantasy situation?
If your PPOR loan is fully offset using an IO loan, you have no effective "non deductible debt" as far as your cashflow goes. This assumes your borrowing capacity can work with an APRA lender. From a borrowing capacity POV, that loan limit, and the IO period will affect your borrowing capacity for any future purchases, so if thats an issue, one may need to let go of some of that cash and pay down and reduce the loan limit ta rolf
You aren't paying interest now anyway. But if you move and turn the current PPOR into an IP, then you don't want to have repaid the debt.
Lets say you pay off most of the PPOR and then you want to make it IP. How about then get the equity out and buy one more IP/Shares and then the interest on the equity loan will be deductible.
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