[ronnie01Participant@ronnie01Join Date: 2013Post Count: 54]

October 13, 2015 - 11:33 am

Benny wrote:

Hi Ronnie, What Corey means is this :-You have a $480k mortgage on a property. Mortgage is Interest Only, and you have an Offset account against the Loan. Loan repayment is 5%, so $24k per year or $2000 per month in Interest to be paid.
You put your salary into the Offset, live off your Credit card for the month, then square up with cc once a month (thus pay no Interest on the cc). A fair chunk of your salary remains in the Offset for much of the month, reducing your interest somewhat, and thus reducing your Interest payments.
THEN, you get a $100k windfall. Put THAT into Offset, and immediately the $480k loan is “offset” by $100k, bringing the amount you pay interest on down to $380k. From that point on, Interest is $19k pa, or $1584 per month instead of $2000. Sound like what you want, Ronnie?
All these Broker guys on here know and love Offsets. Just have to make sure they get set up RIGHT when starting out.
Benny

Thanks a lot Benny, I totally understand now! so using your example above, If I were to just have a principle and interest loan and no offset account and had dumped the $100,000 to my repayments nothing would change, my repayments would still be $2000 per month the only thing would change would be the loan term reduced in years, is this correct? I think I am getting the idea of it now, why doesn’t everyone use offset accounts when setting up there mortgage?

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October 12, 2015 - 11:38 pm

Corey Batt wrote:

So long as the loan is interest only, the repayment will automatically adjust to the net figure achieved against any offset account balance.

Could you give me an example of this Corey? Cheers mate

[ronnie01Participant@ronnie01Join Date: 2013Post Count: 54]

October 12, 2015 - 11:35 pm

Hey Jamie,

At this stage I don’t have any loan, but just above I was referring to interest only loan as the guys mentioned that above.

Thanks

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October 12, 2015 - 7:43 pm

Hi Corey,

Oh wow that is great news. So if I somehow acquired $480,000 loan balance amount and put it into the offset would that mean I would pay zero repayments? Am I somehow on the right track haha how come not many people know about this, most people I talk to just tell me principle and interest so that way you can pay off some of your home, but that way always made me think there must be a better than paying your mortgage for 20+ years.

Thanks heaps

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October 12, 2015 - 6:01 pm

Hi Benny,

Thanks for your reply, oh WOW so are you saying Benny using my example above, If I dumped $100k into my offset account My repayments would be reduced from $2200 monthly? If I did not have a offset account and just payed the $100k to my loan would I just be paying the same repayments of $2200? I hope along the lines somewhere this is making sense, I do apologise.

Thank you

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September 24, 2014 - 10:44 am

Hi Guys

I think I am beginning to understand so using a similar example if my property is 600k and I have 300k paid off and the banks will lend me 100% LVR than I will have access to the whole 300K to invest in another property? if the bank will only lend me 80% (600,000/0.8= 480,000) 480,000 – 300,000 = $180,000 equity? Is this correct?

Thanks guys

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September 18, 2014 - 12:52 am

Hi Guys

Wow thanks for the information guys and thanks Benny for the other info it help me understand why not just paying off your mortgage for 30 years was the best option, I think I am getting there but still a little confused, so using the same example above if my property is $600,000 and I have $120,000 equity. I than want to buy an investment property worth $300,000 and the lender will lend me 90% LVR $270,000 than how do I use the equity to purchase the $300,000 investment property? Thanks so much for your help, I am a slow learner but I will get there!!!!

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July 16, 2014 - 10:18 am

Hi Benny thanks for your reply, If the property purchased had a great capital growth over time and you are using interest only loan , I can understand in the future you can sell for a lump sum as the property has risen in value while claiming tax deductible on the loan, but what if you purchased a property that has a very low capital growth or even no growth? I’d be great to hear what others thoughts on this one as well. Thanks

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July 14, 2014 - 5:20 pm

Hi I know this is an old post but I enjoy reading it and wanted to ask if jwareham1985 converts his loan to interest only loan and rents it out as an IP how will he ever get to pay the loan off?

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July 11, 2014 - 10:22 pm

Thanks for the link Benny wow there was so much information that I didnt know. If I was to buy a property with my partner and for example we earned $50,000 each and we were negatively geared $5000. At the end of tax year how would that calculate that ? Would we be treated taxable income together since the property is under both names eg 50k + 50k = 100k salary minus the $5000? Sorry If this sounds confusing as I am confused

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July 11, 2014 - 9:08 pm

Haha yes I will ask him next time Benny. I did however ask him if I did buy this could I resell this for more after completion and than his answer was property always goes up and you should keep this longer so you can negative gear for tax purposes and claim depreciation etcc ….

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July 11, 2014 - 9:03 pm

Thanks for the reply guys, To be honest I don’t know much about property investing, just read an article on the train one time about brief explanation on positive gearing and negative gearing. The sales guy was well dressed and fancy so I thought he might of actually been right, because coming from a kitchen background I serious don’t have much knowledge on this stuff.

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April 4, 2014 - 6:12 am

One more question how do people come up with the capital growth calculations just for example melbourne cbd has a capital growth 5.0% anually (just making it up for an example) 

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April 4, 2014 - 5:43 am

Thanks so much Xdrew, that was awesome. Not too concerned about stamp duty savings, more just on the development and location. What if the location was already excellent and the surrounding apartments or houses are already valued at X amount? and if the location was already very scarce with no more land to build on? I am thinking what if the property has really good capital growth after few years and prices booming and I don't want to regret and say I should of purchased that 2 years dammit lol. 

Thanks Xdrew I am just speaking out loud what is going through my brain at the moment haha.

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February 25, 2014 - 3:33 am

I want to purchase PPOR first and than later set up a Trust for investment properties. Do you have a service in Melbourne here Jamie as I will be more than happy to use your service. I always see you regularly posting on here and giving great advice, I doubt you would give stupid financial advice or scam as it would ruin your reputation on here.

Thanks

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January 17, 2014 - 12:12 am

Oh ok matt so saying if I did dump 100k onto my lump sum 240k i

Ill be still paying the same monthly repayments but just faster so instead of 25 years it might only take 10 years?? Am I correct so basically its much better having the bigger deposit??

thank you 

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January 16, 2014 - 7:04 am

Thanks to all your wonderful comments guys, I really appreciate all this as I did not learn anything of this at school nor got taught by family.

I am just a little bit worried as I'll be purchasing this property with my partner, which I know as mentioned above Matt_Arnold post ^ 'hey, we are doing ok, let's go on that overseas holiday and blow 10K', you reduce your offset to 40K.This situation will happen because there is money available in the offset account. So I do not think this will work long term unless it was my own property purchase as I will definitely set up interest only. In my situation I think it would be safe to pay down principle and interest with the offset account even if I am losing $$$ in long term I would rather have some principle paid say in 5 years than just paying interest 5 years than with the offset account being touched because of Undisclipinary habits . This situation is tough as I know my partners money habits and is stubborn to learn " Oh don't worry we will just withdraw and I'll put it back…… Oh I need to pay for this bill and I'll pay it back ……" 

Sorry if I got off topic and mentioned the personal side, I think that is why I keep asking about this Offset interest only structure

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January 15, 2014 - 11:25 pm

Theres just one thing on my mind I cant get around to having a interest only loan. Won't II be paying more interest over the time of the loan if I was to use interest only structure??? If I was just paying off interest only loan and putting my money into offset is that kind of like having a savings?? Because if I have a principle and interest on a $240000 loan and putting my remaining savings into a offset would that be even better and paying less interest???

Thank You

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January 15, 2014 - 8:50 pm

Thank you very much FMS for the insight , but won't I be paying more interest over the time if the loan if I was to use interest only structure??? If I was just paying off interest only loan and putting my money into offset is that kind of like having a savings?? Because if I have a principle and interest only on a 240000 loan and putting my remaining savings into a offset would that be even better and paying less interest???

Thank You

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January 15, 2014 - 12:25 pm

Nice thanks for that, what about if your loan was structured principle and interest loan with an offset account would you be able to pay off that even faster???

Thanks