Good Afternoon
My last question was a bit longwinded & overcomplicated,
Basically i need to work out what the financial difference (extra interest paid)is between:
paying 5.79% interest (which will go up is standard variable does, stays 1.5% below) on $50,000 home loan for the next four months
or
paying 7.07% standard variable interest on $50,000 home loan for the next four months but loan interest would be charged on $130.00 less each month as savings would sit in there to offsetDoes anyone know how to calculate this?
Tanya
Well there is no reason why you shouldn’t make these changes for your own financial organisation, perhaps you are adding an additional layer of complication into it but not the end of the world!
7.07% is a high variable rate. I would suggest you could get 0.5% cheaper if you looked around – even at CBA with their pro package.
Good luck,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Simon
Thanks for your reply.
I know it was very longwinded, found it hard to tell enough of detail without drawing it out too much!
I have got the pro package with CBA so do get .5 off but Andrew will not on this 50,000 and we are not looking at refinancing with another institution.
Basically i just need to work out what the financial difference (extra interest paid)is between:
paying 5.79% interest (which will go up is standard variable does, stays 1.5% below) on $50,000 for the next four months
or
paying 7.07% standard variable interest on $50,000 for the next four months but loan interest would be charged on $130.00 less each month as savings would sit in there to offset.Thanks
Tanya
Well the interest rate difference is 1.28% which on $50 000 is $640 pa or $213 for four months.
So if you are saving $130 pm this equals $520 over the four months.
So in this case it sounds like the higher rate might be cheaper.
Hope this helps.
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks very much for your advice Simon.
This website is fantastic, it’s great to be able to get advice from people like yourself.Tanya [
]Hi Tanya/Simon
I think the lower rate would be cheaper. The extra $130 a month sounds like it is coming from your ‘savings’, and therefore would be saving you 7.07% interest on the $130, which is about $1 per month.
Basically
Loan at 5.79% interest = $241.25 per month.
Loan at 7.07% interest = $294.58 per month.Your interest saving on the lower rate is $50 per month. You will ‘save’ $0.76 per month per $130 you have in the offset account. Not really going to put a dent in the $50.
Cheers
MelMel,
I was working on the premise that she had enough in the offset to reduce the interest by $130pm?
Correct me if I am wrong please tancas.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
but loan interest would be charged on $130.00 less each month as savings would sit in there to offsetI saw that Simon, and absolutely agree with you if that is the case, but the above quote is where I was coming from.
Cheers
MelQuote:but loan interest would be charged on $130.00 less each month as savings would sit in there to offsetHi Simon/Melbear
Sorry I made it sound a bit complicated. Yes I did mean what Melbear said that interest would be charged on 130.00 less not saving 130 in interest so i guess the lower interest rate would be cheaper. But then it does only work out to 200.00 so I guess i’ll work out the other pros and cons.
Thanks very much both of you for your help, feel like it was a stupid question now but I didn’t realise it was as simple as just working out the interest difference x the amount borrowed and dividing by twelve for each month.
Tanya
]
The topic ‘home loan structure 2’ is closed to new replies.
