After reading this forum I have come to the conclusion I should have an offset account attached to one of my IP mortgages. So I have dug out the loan paper work and found my Bank West paperwork says:
“You are entitled to nominate an Offset Account to be linked to your Loan Account with an Offset Account Percentage of 100%”Do I therefore just have to nominate an account and put my $25 000 into it thereby reducing my interest payments?
No need to change the loan?
Surely it couldn’t be that simple could it?Thanks for any feedback
Ruth
Ring em up or go into a branch and open an account.
I would suggest you put the offset account on your PPOR loan if you have one. This will save you more money.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yep it is normally that simple, just go open the account and let them know what account to attach it to.
Bankwest normally charge for an offset account but saying that it is normally a couple of dollars a month
$3.99 / month with Bank West for a 100% fully transactional offset A/c
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
That is better than ANZ – $10/month
Update: I called BankWest and was told the loan I can attach an offset account but the loan I have has a fee free redraw facility and I can pay as much onto the loan and take back off the loan as I like.
This being the case is there any need or advantage to setting up the offset account?
I have $38K surplus paid off the loan already and he said I could redraw that at anytime. I double checked that there wasn’t a max amount that could be paid onto the loan in a year and he assured me that if I had a spare 200K I could put that on if I liked and there would be no penalty. I know our other loan has a $15k max surplus paid in a year.
No not an issue as long as the funds redrawn are used for investment purposes.
If the original loan was a PPOR then you would have contaminated the interest and real issue on your hands but if it a P & I loan for some reason on an IP and the funds redrawn are ONLY for investment i guess it is better than nothing.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I set up the Offset anyway just in case it mattered for investment purposes. I tend to only believe a small proportion of what the banks tell me and put more faith in what you guys say! Plus the banks have that clause that pretty much says, at this time the situation is X but whenever I like I can change the situation and not tell you. Didn’t want my hard heard $$ to get caught up in one of their policy changes
Thanks
Ruth
Be careful. Redraw is totally different from offset in terms of taxation. very dangerous to use a redraw without understanding.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I’m sorry for not totally understanding you guys. Could someone tell me what is an offset account?
Thank you,
TongTong wrote:I'm sorry for not totally understanding you guys. Could someone tell me what is an offset account? Thank you, Tonghttp://www.anz.com/common/calculators/homeloanscenarioau/faqs.asp#1question7
http://www.invested.com.au/71/offset-account-2489/
Be careful it is not a partial offset account trap for newbies !
http://www.yourmortgage.com.au/compare-home-loans/loan-guide/offset-account-loan.aspxhttp://www.homeloanfinder.com.au/offset-account/offset-definition/
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