All Topics / Finance / Interest only loan with offset account

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of wan0151wan0151
    Participant
    @wan0151
    Join Date: 2019
    Post Count: 0

    Hey all,

    A fellow novice here. I own an investment property with around a $500k interest only loan. My current repayment are around $1.3k a month while receiving around $1.7k a month in rent. My plan was to have an offset account linked to this property so that I could park excess cash into it which would keep reducing the monthly repayments I would have to make. With the payments reducing every year and the rent increasing, I thought this was a solid plan. However, I’ve been told by the bank that I’m unable to have offset accounts linked to properties with an interest only loan and that it’s only possible to have offset accounts if the property is secured by a P&I loan. I have heard of people doing this though so I’m very confused. Some advice would be greatly appreciated.

    Thank you all :)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Wan0151

    I think what your Bank should have said is “We dont offer such a product”

    Yes IO with offset account definitely exists and we do a number of deals each week for other investors.

    Sounds to me like you a good broker to restructure the deal for you.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of wan0151wan0151
    Participant
    @wan0151
    Join Date: 2019
    Post Count: 0

    Hi Mr Taylor,

    Thanks for your reply, you were indeed correct! I appreciate the advice.

    Cheers,

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

    ha ha Richard was right. They were being a bit misleading and deceptive when they said that. perhaps a refinance is worth considering

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

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

    Profile photo of wan0151wan0151
    Participant
    @wan0151
    Join Date: 2019
    Post Count: 0

    It seems that most banks only provide an offset account if the investment loan securing the property (interest only in my case) is on variable interest and not fixed. Variable interest rate is higher than fixed which increases the monthly repayments and makes this strategy less appealing. Is it possible to have an offset account linked to a fixed interest only investment loan?

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

    Is it possible to have an offset account linked to a fixed interest only investment loan?

    Yes a handful of lenders offer fixed with offset. Heritage and Adelaide are 2

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

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

Viewing 6 posts - 1 through 6 (of 6 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.