Minumum repayments & Redraw account

I've got a 150k available redraw in my investment loan. (paid a bit in advanced) (not an offset account)

Can I pause the minumum repayments debiting from my everyday account and get the bank to deduct the minimum repayments money from my redraw account?
Is there any tax complications? Would my investment loan interest still be tax deductible ?

 

You're asking for fairly specific advice based on very general information.

It is possible with some lenders and products to have the repayments debited from the loan redraw. Many lenders don't allow this. Best to ask the lender directly.

The tax consequences will depend on a number of variables within the specific scenario. It is possible that the interest paid will remain tax deductible, or you may loose it completely. Best to seek specific tax advice.

 

Thank you.
My bank was the one that offered the scenario.

 

This is known as 'capitalising interest'. What would your reason for doing this to be?

 

Can you please elaborate on the capitalising interest?

The reason is to save more money in a high interest rate savings account.

 

This doesn't make sense because you will be borrowing interest at say 3% but getting around 1% in the savings account.

See
Tax Tip 16: Capitalising Interest Tax Tip 16: Capitalising Interest

 

I understand, but my aim is not to pay off the investment loan, it's to save for a deposit or place it in shares.
I'm not 100% sure how this is capitalising interest though, as i'll be using my redraw for the monthly repayments.

 

You will be borrowing to pay the loan.

Best to get some specific tax advice.