Hi My PPOR has now turned into an IP ? I have a fixed loan of approx $170k and a variable loan (VL) of approx $135K ? In this VL I have approx $30k available to redraw ? I currently have approx $70k in savings. I also have an offset a/c to use if necessary. I'm unsure whether to continue using my existing savings in the offset a/c and pay off the loan (I currently have the capacity to pay $3k per month in addition to my mortgage repayments) but I believe as a result of this method, it will reduce the loan interest and each year my income tax will potentially increase. I believe my other option is to use my existing savings and put them in a high interest savings acct (solely in my de-factos name as they are currently below the Income tax threshold) and deposit my additional monthly savings there, thereby the loan interest remains as high as possible for a better tax deduction and I will also pay minimal income tax on the savings earned. Secondly, if I use the savings acct method, is it better to redraw the $30k and deposit that into the savings to increase my interest? I also believe that I can only use the $135k portion of the interest on that loan as a tax deduction even though the loan in effect would increase to $165k. Thirdly, if I use the savings acct method, is it better to change the VL into a FIXED loan and avoid the yearly $350 package fee? If I do this and later change my mind/strategy their will be bank fee/costs to pay. Your help is greatly appreciated.