Putting rent into redraw attached to ppor

Are there pros and cons to getting rent paid straight into our ppor redraw facility then transferring to the bank the mortgage is with?

Is this fine to do or will it cause problems?

 

yes there are.

A deposit into a loan is a permanent repayment of that loan.
Taking money out of the loan is new borrowings.

So everytime you take money out to pay the investment loan you are borrowing to pay interest.
This is not necessarily a bad thing,

Worse, perhaps, is that if you ever were to rent you house out you might have a large loan but none of the interest on it may be deductible.

 

Get it auto transferred into an offset account only, as per the comment from Terry regarding non deductable interest if it (PPOR Loan) was to turn into an investment property loan.

If you don't have an offset account, speak with your provider.

 

An offset is not necessarily the way to go as these cost money in the form of higher rate loans and monthly fees.
Loan Tip: Not everyone needs an Offset Account Loan Tip: Not everyone needs an Offset Account

There may also be no issue with paying off the loan associated with the main residence if it will be the permanent main residence or likely to be sold later and never rented out. But changing minds does happen.

Best to seek specific advice.

 

Ok so we eventually plan to rent this out as its just a 3 bed 1 bath and partner is due in august with 2nd. Partner hates the thought of sharing a bath room with teenage boys.

So maybe getting it paid straight onto the mortgage attached to IP is a good idea until we know for sure what the plan is

 

In that case I would cease paying into the loan immediately.

 

The IP is not built yet.

If the plan was to get another IP then is it fine to put rental income into redraw until there is enough to withdraw for another house?

 

i wouldn't deposit any money into the home loan at all from now on - other than the min repayment of course.