All Topics / Hotch Potch / ING Direct rate rise

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  • Profile photo of Fudge111Broz00Fudge111Broz00
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    @fudge111broz00
    Join Date: 2003
    Post Count: 245
    December 16, 2003 - 12:55 am

    or were you guys all talking about Int only Loans?

    Fudge111[:I][:)]

    Profile photo of tancastancas
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    @tancas
    Join Date: 2003
    Post Count: 19
    December 16, 2003 - 2:20 am
    Quote:
    Also, why wouldn’t you just use the $5000 to pay off the principal, surely that would be a better option, if you didn’t need the money in the short term?


    Hi all

    I guess the idea was sitting it in the offset acct because you were saying you liked having access to your funds so if u were to get a home loan that would be your best option.
    With a 100% offset account you would be equally beneficial in either paying 5000 off home loan or putting in offset depending on what kind of access you were after and the conditions/fees on redraw that your lender has.

    Tanya

    Profile photo of Mortgage HunterMortgage Hunter
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    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781
    December 16, 2003 - 2:28 am

    Also, why wouldn’t you just use the $5000 to pay off the principal, surely that would be a better option, if you didn’t need the money in the short term?

    OK the main reason I would recommend an offset over just paying down the prinipal is as follows.

    If you redraw from a loan you are effectively creating a new loan. This new loan may or may not be deductible depending on what it is used for.

    Imagine down the track turning your PPOR into an IP and buying a new PPOR. This is not an uncommon situation. Problem is that the debt is now mostly on the wrong house tax wise.

    So putting your savings into the loan means a redraw to buy a PPOR – not deductible.

    Putting it into offset means the original loan is intact and helps enormously with the tax structure if there are considerable sums involved.

    Hope this helps a little.

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

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

    Profile photo of Mobile MortgageMobile Mortgage
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    @mobile-mortgage
    Join Date: 2003
    Post Count: 913
    December 16, 2003 - 2:52 am

    quote:

    Gotcha!, thanks mobile mortgage, i understand now, so basically it is better because the interest is now not tax assessable, where as in say ING Direct savings maximiser it is, is that right?

    Also, why wouldn’t you just use the $5000 to pay off the principal, surely that would be a better option, if you didn’t need the money in the short term?

    Fudge111[:)]

    Hi Fudge,
    Paying $5000 to pay off the principal may be a better option, Keep in mind some Banks/lenders products may have a limit on the amount of extra repayments you can deposit,

    If you park spare funds in an offset account you then withdraw the funds as you need them,
    Eg, use the credit card for bills etc, park wages spare cash into the offset, repay the amount owing on the credit card from the offset account before interest on the credit card is due,
    And you simply repeat this cycle.
    cheers
    Steven.

    PLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.

    [email protected]
    http://www.mobilemortgagemarket.com.au
    Ph:0402483216
    Victoria

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