All Topics / Finance / Paying off loan in offset?

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  • Profile photo of picklesampicklesam
    Participant
    @picklesam
    Join Date: 2004
    Post Count: 55

    Hi all just want to ask if i have an offset account, and I put 100% of the money i owe into it, what happens to my loan? ie I owe $300k but now have $300k in the offest account. Will the account be closed or can i keep putting money into it?

    Profile photo of WhatIfWeFinanceWhatIfWeFinance
    Member
    @whatifwefinance
    Join Date: 2009
    Post Count: 58

    Assuming you have an interest only facility, $300k in an offset account with 100% interest offest means you pay no interest. The loan is not closed and you can deposit or withdraw from your offset account.

    If you are on P&I you may still be required to pay the minimum monthly repayment but there will be no interest and you are paying off principal only.

    Profile photo of picklesampicklesam
    Participant
    @picklesam
    Join Date: 2004
    Post Count: 55

    Thanks Spiro for your help!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    And it depends on the bank too, St G in particular are different. One of their offsets actually reduces the principle, even on IO loans.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of ducksterduckster
    Participant
    @duckster
    Join Date: 2004
    Post Count: 1,674

    Also if you go over 100% you will receive a letter from the bank stating that an offset account can be over 100% as it happened to me once.

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