IP loan's direct debit account option

Scenario: I am about to set up an I/O IP with offset account, and I am not sure if the direct debit for IP's interest payment should be directed from my IP offset or the PPOR offset account.

Rental income will go to my PPOR offset.

The account will be used to pay for the deposit and purchase expenses. Any left overs will be used to pay for rate/land tax/ongoing fees. So I believe the interest should come from this offset account too.

But I am just having a brain freeze to be 100% sure that it's correct.

Any one could help me out here.

Thanks

 

PPOR offset.

Why do you have an IP offset?

 

Thanks for the answer Terry.

Having IP Offset so if it wouldn't incur interest until after I start to use the fund.

 

Have you borrowed money and put it on the offset?

 

Yes, borrowed money for investment purchases, and the funds is currently sitting in its offset account. Not the PPOR offset.

 

Take care!

 

Why not pay the IP mortgage off the IP offset?

 

From the IP offset?

Because by parking money in this offset the borrower is paying more interest on their home loan and this isn't deductible.

 

Agreed, but here is the scenario I am under the impression that is happening:

OP has his PPOR offset almost full so he opens a new IP offset (if the PPOR offset isn't full, he can split the PPOR loan and have 2 offsets, one with non deductible, the other deductible for inv purposes).

When time comes to pay the IP mortgage, payments are taken from the IP offset, so that the PPOR debt remains in minimum.

 

Oh sorry, it if s full then yes that would be the way to go.