Line of credits and Interest

Hello fellow investors,
I have two LOC for 2 investment properties.
As I have no interest is aquiring more property, I wish to focus on paying down the LOC debt.

Will the Interest still be deductible if the LOCs funds are transferred back to Owner Occupier loan (offset account) just to get the low Interest rate? Is it worth it?

Fyi. LOC rates are both 5.45%, while the owner occupied is 3.97% rate.

Note, the LOCs were used 2 or 3 years ago to purchase the investment properties.

 

i thought i answered this a few mins ago.

No the interest would not be deductible if you borrowed to fund an offset account - you would also be paying more interest.

 

Perhaps you are asking if the owner occued loan could be drawn upon to refinance the LOC?

Yes it can and yes the interest can be deducitble, but you would want to split the loan first.

 

Thanks Terry for your response.
The owner occupied offset has never been closed. However the owner occupied loan is paid off. It also is open with zero balance if that makes sence.

 

Sounds like what I'm trying to do but in the opposite direction.
So your Owner occupied loan is paid and the account is at $0
If you split the loan in to 2, each subsuming the LOC account with its respective LOC balances, you want to have those investment loans at 3.97% instead of 5.45%?

 

In that case the loan could be paid off and redrawn and used to pay down the investment loans.

Strategy: Borrow Against the Main Residence for an Investment Loan (Shuffling Loans Around) Strategy: Borrow Against the Main Residence for an Investment Loan