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Should I put Savings in owner occupier or investment offset account?

Discussion in 'Money Management' started by Chris Martin, 26th Oct, 2017.

  1. Chris Martin

    Chris Martin New Member

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    26th Oct, 2017
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    Location:
    Sydney
    Should I put my savings and salary into my owner occupier interest only mortgage offset account with mortgage at 4.3% or my investment properties principal and interest offset mortgage account at 5.6% which is already positively geared?
    From a pure cash perspective the latter works out much better option as I pay off more of the principle each month + benefit from the higher interest rate. Also, there is no benefit of negative gearing. Is anyone aware of any additional tax implications or any other considerations?

    Thanks

    Chris
     
  2. Corey Batt

    Corey Batt Finance Strategist

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    Location:
    Adelaide, SA
    Put it into your PPOR offset account - much better to deleverage/interest reduce on your non-deductible based debt.

    Then get your interest rates sorted - you're paying well above market rates. The IP loan especially should be high 3's to mid 4's dependent on whether you want to remain on IO or P&I - in either case though at least 1% less than what you're currently paying.
     
  3. Chris Martin

    Chris Martin New Member

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    Thanks heaps for the reply
     
  4. Terryw

    Terryw Well-Known Member

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    It depends on your taxable income. If you don't pay tax then it may be better to put it of the investment loan - from an interest saving perspective. Assuming both properties have the same owner.

    Just work it out mathematically.

    Alternatively consider a recycling debt strategy - pay down the cheap non-deductible loan and reborrow to pay down the investment loan (at owner occupied rates).