I've been reading a lot of threads tonight trying to get my head around which is better. Can anyone explain to me the positives and negatives of both? I'd really appreciate it.
Thanks,
Michael.
Thanks,
Michael.
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Equity is how much of your home you own. It's the difference between the value of your property and the amount you owe.
An offset account is a savings account where you can put your savings or other cash. Rather than paying you interest like many savings accounts, it changes how the interest on your mortgage is calculated. The interest is calculated by assuming the amount owed is the amount owed minus the amount in the offset.
It's important to note that money in the offset account doesn't actually change how much you owe (and thus does not effect your equity position), it just changes how the interest is calculated.
I've been reading a lot of threads tonight trying to get my head around which is better. Can anyone explain to me the positives and negatives of both? I'd really appreciate it.
Thanks,
Michael.
So we should make the PPOR loan IO if we are going to purchase more in the future?Instead of paying back the bank you can make interest only payments and keep the difference in an offset account and then you decide what happens to this money.
So we should make the PPOR loan IO if we are going to purchase more in the future?
So we should make the PPOR loan IO if we are going to purchase more in the future?
So would it be 'advised' to basically transfer 100% of your pay into the offset and pay bills etc from that account?
Do they both work the same, except offset is more easily accessible?
EDIT (in reply to your edit):
Basically just wondering how to store any extra funds we may obtain. We are very new to all of this (my fiancee's first house, my 2nd - other is an IP now). We want to buy another one in the future (ASAP of course ) and just want the most efficient, cost effective way to do so.
So we should make the PPOR loan IO if we are going to purchase more in the future?
I've been reading a lot of threads tonight trying to get my head around which is better. Can anyone explain to me the positives and negatives of both? I'd really appreciate it.
Thanks,
Michael.