offset account can be a powerful tool for property investors.
Unlike a redraw
facility, a mortgage offset account isn’t part of your investment loan but
rather, a separate transactional savings account. Instead of earning interest
on this account, the balance in this account "offsets” the interest on the loan
that it is linked to.
So for instance,
if you buy an investment property and have a loan for $400k with a mortgage
offset account and you have a surplus cash savings of $50k that you out into
the offset account, the lender will subtract this $50k from the loan balance
and only charge you interest on the balance of $350K.
It is possible
to get the same outcome from a re-draw facility but it lacks the same
convenience as an offset account.
·Some lenders set a minimum
redraw amounts & charge a separate fee for each re-draw
·Some lenders can make you wait
a few days before you get access to the funds
·Re-draw facilities often lack
the transactional characteristics of offset account (like Bpay)
interested in an Offset account for your property investment loan?
Saturday, 22 February 2020