repayment calculation

Hi

I may be missing something here - but cannot find a calculator for this.

If i have an Investment Loan say 200K with 100K in equity that I draw out and place in 100% offset account
My balance becomes 300K and my interest repayments are calculated on 200k? - However as my loan is P & I doesn’t my principal repayment increase?

How can I work out what my new monthly repayment is?

I.e. with offset balance.

Thanks

Yes think you are getting a little confused.

If the loan is $300,000 then the P & I repayments are based on this loan amount.

If you have $100,000 sitting in a 100% offset account then interest is only charged on the net balance i.e $200,000.

Therefore the difference between the 2 figures is a principal reduction.

As the principal debt reduces the amount of interest reduces but assuming that interest rates do not change the monthly P & I repayment will stay constant.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

Thanks for that Richard.
I think I follow.  So the difference in the repayment amounts goes to the principal.

Now i would wait until you have found a property and are ready to pounce.

Also why would you have a P & I investment loan ?

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

I do not have any non deductiable debt.

You may still argue against p&i

Figc,

I am sure Richard will explain in detail, however having an Interest Only loan with an Offset account gives you the same identical interest cost as paying down a P&I loan, however with greater flexibility.

There are some great posts on this around the forums (probably 50% of them are from Richard), so perhaps have a look around and then fire any general questions back here.

Regards,
YI

"Knowledge is Power"

That was insightful Sandeep. Looking forward to your next post :)

Pass Go Home Loans Pty Ltd - Australia wide Mortgage Broker
www.passgo.com.au | info@passgo.com.au | p. 1300 656 299 | PO Box 286 Woden, Canberra ACT 2606
Expand your due diligence – "like" Pass Go on FACEBOOK and get up-to-date IP info www.facebook.com/PassGo

So P & I has been calculated for a 200k loan

It should however it may not. You have to check that the bank alters the repayment required to pay off 300k otherwise you could be paying repayments levels based on 200k while your loan balance gradually increases by not paying off enough interest on the extra 100k debt place not be paying anything off the loan.
Don't laugh it has happened to me !

Use amortization template in excel or a repayment online calculator.

Offset balance comes off loan amount for interest calculation
You could work out the interest amount for the offset amount
So I = offset amount * int rate / 100 * 1/52 to make it a weekly amount and then make this an extra repayment in the calculator

If you borrow 100k and push loan up to 300k and then offset 100k you are in effect only got 200k interest calculation

Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.