Moving a LOC to an offset account

Hi All,

I have an investment loan with CBA that is about to end its 5 year fixed term. Shocking rate of 5.7% for the last 5 years! Anyway that is all history now. I have found a good interest only rate from a non bank company (4.04%) that is much better than what CBA (4.83%) can offer. The complexity is that I also currently have a LOC with the CBA that I use to pay for the investment property expenses excluding the investment loan interest. I claim deductions on the interest paid on this LOC loan.
The non bank company do not offer LOC loans but do offer an loan that has a 100% offset account linked to it.
Can I move the LOC loan with CBA to the other provider but move to a loan with an offset account. Interest payments for this loan would come out of the offset account and any property expenses would also come out of the offset account. Does this sound feasible?
My next question is how do I carry the current deductible debt across to the new loan with offset without wiping all the deductible debt out and starting again?

Any help would be appreciated.

 

It seems you might be talking about borrowing money and parking in the offset account?
Tax Tip 1: Parking borrowed money in an offset account

This is potentially dangerous. Read this and then get some tax advice. Tax Tip 1: Parking borrowed money in an offset account

And i would be splitting the LOC into 2 - used and unused portion.

Merely refinancing doesn't change deductibility.

And watch out for non-bank lenders. Is the offeset account a true offset?
btw you could probably get a better rate with a bank.

 

Thanks Terry.
I see the risks associated with parking borrowed money in the offset account. I do not plan to contaminate the money in the offset account. This would be all borrowed money and used purely for the purpose of paying for the costs of the investment property. LOC loans seem to have higher interest rates with little advantage over the offset loan option.

What would be the purpose of splitting the existing LOC into 2? Is this to make it easier to move to a loan with offset account?
The non bank lender is Reduce Home Loans which scored highly on the canstar rating. They say their loan is 100% offset with a interest only variable investment rate of 4.04%.

 

Be careful paying interest from borrowed money. That's a very low rate - if it's a set and forget type of arrangement it could be fine. But if you want any kind of flexibility you would probably be better off with a different lender.

 

If you do contaminate the loan this way the used portion would be protected.

 

Hi Rolf,
What do you mean by 'fully drawn Ma n Pa pay if off fast loan'?

 

Be aware of the fee as and charges as usually high with non bank lenders.

Some of the things to consider when choosing a lender;

1. Does it suit your short, medium and long term goals? (most important)

2. What are the service levels to get the deal approved?

3. Rate