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Split/variable/fixed???

Discussion in 'Money Management' started by holtk5, 7th Aug, 2007.

  1. holtk5

    holtk5 Member

    Joined:
    29th Jul, 2007
    Posts:
    9
    Location:
    Melbourne, Vic
    Up until recently i had no idea split loans existed. (Still learning!).. We will be organising our first home loan in Jan/Feb 2008. I was told 'split loans' are the way to go, instead of having one huge loan to pay off, and the rising interest rates.
    So..considering we will want to invest in property in the future, make extra repayments into our home loan, and have basic (no frills) loan, what is best?
    Thanks
    Kate:)
     
  2. Sk3tChY

    Sk3tChY Well-Known Member

    Joined:
    4th Aug, 2007
    Posts:
    358
    Location:
    Sydney, NSW
    Im not really sure what the benefits of splitting your loan are, apart from being able to have 1 interest rate fixed and 1 variable.

    To my knowledge the best thing for you to do if your planning on buying an investment property, would be to setup up your current loan with an offset account, and store the 'investment' money in the offset account, so your saving on interest.

    Then when it comes time to get the investment property take out another loan for the investment property, so you can seperate your good debt from your bad debt. Have this loan set to interest only so you can maximise your repayments on your original loan.

    This way you've;

    1. Got easy access to your money, as its in the offset account.
    2. Cleary seperate your bad debt, from your good debt.
    3. Maximised your repayments on your PPOR
    4. Made the most of your tax benefits on your IP.