Ask Noel

Your proposal is sound provided your parents' bank will credit interest from the offset account against the interest payable on the fixed-loan account. If the money remains in the offset account, there should be no problems returning it to you.

My husband and I both work. I'm 52 and my husband turns 60 in November. He has $500,000 in his super fund and I have $200,000. We have a house worth $2 million and have built another for our sea-change retirement. Right now we owe about $600,000 on the new house. When my husband turns 60, should we use his super to pay off the mortgage on the retirement home? Our plan is to sell our current house when we retire and use those funds to live off.

You are both relatively young so you have lots of time left to recontribute to super funds that you have withdrawn from. It does seem a reasonable strategy for your husband to withdraw a large sum from his super to reduce the mortgage on your new house, as long as you do not intend to rent it out. This can be done tax free once he reaches 60. The $150,000 annual limit on non-concessional contributions has not been changed so it would be a simple matter to return the funds to the super account once the current house has sold. Of course, if your husband retires at 65, he will be unable to contribute unless he passes the work test, which involves working 40 hours in 30 consecutive days.

I've sold an investment property and will get $200,000. I've a home loan of $290,000. Should I use the money to reduce my loan? Though it makes sense to cut the mortgage, I'm apprehensive. If I sell my existing home and move into another place in about two years, I may be worse off in the falling property market. Should I leave the money in the bank and use it as a deposit when I buy another home?

I assume you wish to maintain flexibility in the event that you wish to keep your existing house and rent it out at the same time as you buy another. If that is the case, you should place the money in an offset account because then the interest will be deducted from the interest being paid on the mortgage, instead of being paid to you as taxable income. If you do decide to move, buy another house and keep the present one. You can then simply withdraw the money from the offset account for a deposit on the new property. This will enable you to maximise your interest deductions.

We are in a two-bedroom unit valued at $525,000. We paid $472,000 for it four years ago. We would like to move to a bigger property as we have two kids and are planning a third. We also have some debt we would like to clear. Should we sell our unit, clear the debt and rent a bigger house - basically start over again - or should we stay in the unit and struggle for a bit longer so we can eventually buy a bigger place?

Renting is always cheaper than owning, so unless you foresee a strong capital gain in the unit, a better option may be to quit it now and start again. If your debts are caused by poor management, you should do strict budgeting, otherwise you will find any surplus funds from the sale will be slowly frittered away.

This article is general in nature. Seek further advice before making financial decisions.

Questions to Ask Noel, Money, GPO Box 2571, Qld, 4000, or see moneymanager.smh.com.au/sitewide/askanexpert.html.