If i plan on owning an ip as a future PPOR

If i plan on owning one of my ip as a future ppor should i just pay it off ?
(Im renting atm)

 

no

 

yes

 

Depends on your overall goals. If you plan to make it your PPOR in 10 years, then probably not a good idea to pay off now. You will be missing out on maximum tax benefits. But also depends on your situation. Do you have a strong income which will enable you to pay this loan down and continue to invest? Do you require the additional cash flow to fund further investments in the near future? Do you plan on this property being the only property you ever purchase? Will you require funds for other investment classes like shares or managed fund investments before you settle into the PPOR? You need to consider the opportunity cost of putting maximum dollars into an investment loan vs what else you could possibly be doing with that extra money.
The bigger picture needs to be addressed in working out the answer to a seemingly simply question. Also consider the tax consequences which can have a significant effect over time.

 

Hahahaha that's gold .

 

Common sense would indicate you don't. What if you change your mind about where you will live?

You can save the same amount of interest by using a IO loan with offset so you can do both - 'pay' it off but not pay it off.

 

Like a computer, garbage in, garbage out.......

 

Pay the extra into an offset account attached to the loan to keep your options open.
Marg

 

We need to get this ^^^^^ on an auto responder

 

That, or make the search function button bright red and glowing...

 

People just don't use it ~sigh~

 

If you have ability to build an offset (pay off the loan) I would:
1. Built up offset in current PPR
2. Transfer funds to new PPR offset once you move into it. Therefore get the benefits of the tax deductions now while reducing non deductible debt interest.

If you do not have a current PPR and only that investment, why pay it off? If you are renting:
1. Build the offset in the IP
2. Use the funds for future deposit.
3. Possibly debt recycle the offset funds to turn some of non deductible PPR loan into IP loan.

 

Guilty *raises hand* .

But there is logic behind it. See this world is so fast moving and changing all the time. If I stumble upon a post from 2 years ago, there is danger that it is no longer relevant. All you experts out there, your head is always relevant so I like to get the info from the source so to speak .

 

So OP doesn't own anything to his name...why the arrogance in other threads?

 

He knows something the rest of this forum of very seasoned and experienced people some who even work in financial planning don't know.

I prefer to listen to someone who has walked the talk not talk the talk.

 

Big will finally realised the truth
Yes thats right i do know something about life you guys dont

 

Thanks for your response, very briefly can you explain debt recycling. Thanks

 

Let me google that for you

 

Care to share, so we may learn something from you?

 

What do know about life that we dont? Genuine question from me. I would like to know.