What should I do next?

Discussion in 'Loans & Mortgage Brokers' started by Pete375895, 24th Aug, 2021.

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  1. Pete375895

    Pete375895 Member

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    Got a PPOR that has a offset of 320k with a loan balance of 370k on P&I.

    Also have 3 other investment properties with a total loan balance of 950k on IO.

    Keen to stop paying the principal on ppor once the offset is matches to the loan balance and just divert the funds to the investment properties and moving them to P&I.

    Am I crazy doing this? Does it make sense?
     
  2. momentum26

    momentum26 Well-Known Member

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    I am not sure if your bank would allow you to go on Interest only repayments on your PPOR once you have funds in your offset matching to your PPOR loan amount.

    Would the current PPOR be your forever home or you may upgrade to a newer home in future?

    If this is your forever home then why would you not want to keep paying the principal and get over with the loan on family home?
     
  3. Trainee

    Trainee Well-Known Member

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    what are you trying to achieve? Why do you want to pay down the ip loans as opposed to the ppor loan? Whats the advantage?
     
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  4. skater

    skater Well-Known Member

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    Once you have funds totally the same amount as the PPOR loan, the bank won't stop taking principal payments out. That's not how it works. You will stop paying the interest component only. You can have the payments for the loan taken directly from the offset, so that it just slowly pays down over time.
     
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  5. Lindsay_W

    Lindsay_W Well-Known Member

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    You've got it all backwards mate,
    The PPOR Debt is the debt you should be paying down the principal on, not the Investment loans. Get some tax advice and the reason will be obvious, non-deductible debt vs deductible debt.
     
  6. Pete375895

    Pete375895 Member

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    Thanks all for the quick feedback. Definitely will keep paying off the principal on PPOR :)

    My goal is get into positive gearing for my investment properties. I was looking at two ways of getting 1. Renovate to drive increase in rental income and 2. Start chipping away at the investment loans to reduce interest payments.
     
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  7. Trainee

    Trainee Well-Known Member

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    What about buying more ips?
     
  8. Pete375895

    Pete375895 Member

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    Definitely thought about it. But I just hate spending the extra money on those damn stamp duties. Trying to learn more about fully franked dividend shares to try to get an easier income stream.
     
  9. Trainee

    Trainee Well-Known Member

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    Will you also hate the profits from leveraged price rises? Stamp duty is a cost and just has to be looked at with the expected profits.

    doesnt sound like you have enough net to build an income stream to retire on. So you probably need more gains first.
     
  10. skater

    skater Well-Known Member

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    Stamp duties are a cost of doing business. Like it or not, you've got to pay them.
     
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  11. momentum26

    momentum26 Well-Known Member

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    Haha. That’s where the state govt makes most of their monies and they won’t waive this for your investment purchase :)
     
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  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Not crazy. It is a plan worth considering.
     
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  13. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    If your PPOR is currently P&I you won't be able to revert it to IO unless you restructure it and that's a full assessment, until then it will be just be 100% principle repayments with no interest charged if its 100% offsetted.

    If 100% offsetted, diverting the extra cash to your investment is the correct thing to do to reduce the interest charge. Paying P&I depends on what your end goals are, but leaving it as IO and parking the cash in the offset is a better idea.
     
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  14. Pete375895

    Pete375895 Member

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    Thanks again all, love this forum to toss around ideas that are usually stuck in my head.
     
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