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Set up IP Loan & Everyday Accounts

Discussion in 'Real Estate' started by Amber, 3rd Nov, 2010.

  1. Amber

    Amber Member

    Joined:
    6th Oct, 2009
    Posts:
    9
    Location:
    Wollongong, NSW
    Hi Guys,
    well, my situation is this;

    My partner and I have reciently split up. We bought a house (was our PPOR) about 18months ago and have decided to keep it as an IP. We have changed the title from Joint Tenants to Tenants in Common (50:50).

    We have spoken to the bank and refinanced the loan in two, so we are both only responsible for our 50% (interest only. i am not entitled to an offset a/c with this loan type).

    We have a single joint account for the rental income to be paid into (the real estate was unable to pay into 2 accounts). When the dispersements are made we will transfer 50% each into our own accounts. Landlords & Building insurance is paid from this account. The bills, rates etc will be paid by the managing agent before rent dispersements are made.

    My question is, how do i set up my personal accounts to keep them separate from the rental income? and which account is it best to pay the interest from?

    I currently have 1 savings a/c (high interest), 1 Joint a/c (rent paid into), 1 everyday a/c (pay goes into) & 1 CC (only to be used for IP expenses).

    I was considering opening another everyday a/c and transfering the rent & additional funds to this account to cover the interest payments. Does that sound like the best thing to do? or would i be ok just using my current everyday a/c for everything?

    I'm sure this wasn't the best way to set things up, but it was the best i could do at the time.

    Any suggestions would be fantastic.

    thanks heaps
    Amber:confused:
     
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Hi Amber

    There is no benefit in having many bank accounts.
    Can you use the high interest account as a general transaction account?

    If not, use your everyday account for everything.
    Does the lender deduct the monthly interest from this account?

    You can schedule monthly transfers from the joint account to the everyday account.
     
  3. Amber

    Amber Member

    Joined:
    6th Oct, 2009
    Posts:
    9
    Location:
    Wollongong, NSW
    Hi Bill,
    Thanks for getting back to me so quickly.

    There is no benefit in having many bank accounts.
    Thank you, i really wasn't sure at all.

    Can you use the high interest account as a general transaction account?No, its purely a savings account.

    If not, use your everyday account for everything.
    Does the lender deduct the monthly interest from this account?

    Yep, its an IO loan so interest is deducted on the 1st of each month from my everyday account.

    thanks again, i feel better about it all now :)