P&I Forced saving?

I'm looking to change one of my IP's To P&I:

As of last valuation it was $431,000
with debt of $292,000
LOC secured against $44,000

Assuming 80% LVR if I paid $12,000 I could increase my LOC to by $20,000 (I think my bank will let me increase it in 10,000 increments even)

Looking further on every dollar I pay in Principle I could draw down again (I just did a quick check on bank website calculator doing this would give me enough in 5 years for my next IP - which would actually be sooner with my savings)

Sorry this is more of me just brainstorming with myself as opposed to a question to the forum - I am in an ongoing process of unlearning a !@#$ load of bad money habits I've had since I can remember and curious if any one does this to force savings?

I know IO with offset its the general consensus, but if I'm just borrowing the money paid off when I can, is this so bad? (either way this money will end back up in another IP )

Am i missing anything major (apart from a price correction?) this IP is in Perth and hopefully this is the price it corrected to)

Cheers

Kayne

 

Yes it can be good as it is a form of forced savings. it can also help serviceability if the loan is PI.

But consider that serviceability is tightening so if you pay a loan off now you may not be able to borrow an equivalent amount tomorrow.

 

An offset may be smarter to avoid the issue Terry referred to. The offset is always liquid and available. In 5 years credit the loan with offset, split loans and draw a new loan amount.