rent to cover equity loan or not?

I have a 86k equity loan separate to our ppor. its $113 a week to service

Filling out some property manager details is asks if i want to split rent money. Should i make a note to say 113 to go to the equity loan so i can stop paying it or does it make more sense to just send 100% of rent to offset and ill just keep paying it off which will take 14 years...

 

are you currently paying the interest on the equity loan?

 

Yes 350 a month

 

what is the $113 to service?

 

Minimum repayments of the loan with a 4.37% interest rate

 

so you are paying extra? Why not just get all rent deposited into the offset account and maintain existing payments?

Also seek tax advice as you might be losing out if you are paying extra into an investment loan.

 

Not paying extra but it will take along time to pay off. How are you meant to get a 2nd or 3rd property or get more equity?

 

4.37% seems high. Unless you are on fixed ask your banker about a lower rate. They should be able to do something with a 3 in front of it.

 

It's a investment loan not ppor, our ppor is 3.3

 

The point is you should be paying off your ppor debt as a priority. Often this means interest only on all investment debt to direct maximum funds to poor.

 

We pay a lot less than 4.37% on our inv loan with our PPOR. Remember it is secured against your PPOR so effectively it can have an owner occupier rate, even if it is for investment purposes.

 

This depends on the lender. Generally they want to charge investment rates if the funds are used for investment

 

I have multiple <$100k equity loans(either secured against PPOR or secured against other IP) which are used to buy other investments and all of them are below 4.0%. You should talk to the bank

 

Oh, i didnt think banks would give you another equity loan if you already had one open. But if your serviceability is high then they wouldnt care?