How to save thousands on your mortgage

What Glenglen is talking about is exactly the dilemma I found myself in when we went to build a new house but wanted to keep our current one. You can not use an increased loan against your current principal place of residence to turn it into an investment property. Therefore by using an interest only loan with an offset you can still use the full loan value eventually for an investment loan. If the value of your house goes up significantly over time however you still don't get that much of a benefit.

Because I did not do that I ended up buying half of my house from my wife. Supposedly this is all fine and you get to use the new loan as a tax deduction, this also meant that there were no stamp duty implications.

Hi room4acubby

Sounds like a lot of hassle. At least you now know how to structure your loan the first time and save you all that hassle.

You only lose out if you ever turn your current home into an investment, depending how much of the principal you pay off depends how much tax you can't claim. I always seem to want to build again (to get it right this time) but don't want to sell my houses and this works the best for tax purposes. Plus, I don't know what going to happen in the future so going this way gives me more choices later on.

I agree with Glen Glen,

If you think that your PPOR may become a investment property down the track, it is alot better to use the IO/Offset account combination as it allows you to have maximum borrowings against a tax deductable debt, as opposed to a PPOR which is not tax deductable.