Share Investments: Offset vs. Margin Loan?

[Jim B]

I have a $475k home (where i live) with $230k mortgage (at 4.45%), $200k in offset. I'm on marginal tax rate of 37%(39% w/Medicare). Have been educating myself about investing in shares. I'm trying to find out what % return from share investing that I would need to have the equivalent net benefit that:
1) I current have with the offset (4.45%).
2) with a 3 year Margin Loan at 6.4% (got that fig from CBA)
thanks

 

[pinkboy]

Re: Share Investments: Offset vs Margin Loan?

I have a $475k home (where i live) with $230k mortgage (at 4.45%), $200k in offset. I'm on marginal tax rate of 37%(39% w/Medicare). Have been educating myself about investing in shares. I'm trying to find out what % return from share investing that I would need to have the equivalent net benefit that:
1) I current have with the offset (4.45%).
2) with a 3 year Margin Loan at 6.4% (got that fig from CBA)
thanks

You're thinking about it wrong.

Call CBA and have them reduce your HL by 'paying down' the PPOR loan by $200k, and 're-borrowing' the $200k back as a split loan. This new loan, if used for investment purposes, will be deductible. Kills 2x birds in one stone.

The upside is you now have a fully deductible margin loan with an effective sub 5 rate.

The only downside is you don't have that $200k 'at call' should anything personal arise requiring funds. If you use this for non investment purposes you will contaminate the loan.

If you're not confident, contact a reputable Mortgage Broker who knows what they are doing to call on your behalf and reset the loans.

pinkboy