how many loans can a offset account offset?

[YvonneVincent]

Hi guys just got a dumb question that suddenly came up

Is it true that a offset account can only offset one loan account? say all loans are with the same bank in a pro package.

THx

 

[Aaron_C]

No you can set up as many as you want but you have to pay additional account fees. But at the very minimum you should have that offset account against your PPOR loan to reduce your non-deductible debt ASAP.

 

[Rolf Latham]

Hi guys just got a dumb question that suddenly came up

Is it true that a offset account can only offset one loan account? say all loans are with the same bank in a pro package.

THx

depends

some lenders allow more than one, some only one

ta
rolf

 

[VCDenton]

No you can set up as many as you want but you have to pay additional account fees. But at the very minimum you should have that offset account against your PPOR loan to reduce your non-deductible debt ASAP.

no ppor yet

 

[VCDenton]

depends

some lenders allow more than one, some only one

ta
rolf

Hi Rolf

the situation
loan A B C are all with nab
all loans around 270K
a offset account attached to loan account A

so are u saying that some banks allow one offset account to offset loan A B and C simultaneously? i.e, each day when they calculate interest the principal in all the loans will be 200K assuming I have 70K in the offset account?

 

[Bradsdad]

Usually just the one loan per offset. Depending on the lender additional fees may be payable for extra offset facilities.

 

[Aaron_C]

so are u saying that some banks allow one offset account to offset loan A B and C simultaneously? i.e, each day when they calculate interest the principal in all the loans will be 200K assuming I have 70K in the offset account?

No that would require $210,000 in all your offsets

 

[Rolf Latham]

Hi Rolf

the situation
loan A B C are all with nab
all loans around 270K
a offset account attached to loan account A

so are u saying that some banks allow one offset account to offset loan A B and C simultaneously? i.e, each day when they calculate interest the principal in all the loans will be 200K assuming I have 70K in the offset account?

that would be nice : )

Nah, I meant to say that some lenders will allow more than ONE offset to be attached to ONE loan

ta
rolf

 

[wobbycarly]

No that would require $210,000 in all your offsets

What he said - if you have less in the offset than the value of the loan(s), how would it be offsetting?

 

[Ergophobia]

its really quite simple

( balance of loan(s) - balance of offset account ) X Interest Rate = Interest Payable

 

[sanjayag]

How is offset different from a redraw facility.
Like with ANZ, I can redraw from what I have paid over the minimum required installment without any redraw fees. But has to be minimum $2k redraw.

 

[BMan]

with redraw if you use that money for anything else other than an IP you cant get the tax deduction on the redraw amount

where as the offset allows you to put your own money into it to lower the interest but you can remove it whenever you want and your loan is still the full amount with the full amount still being tax deductible, good for paying off a PPOR which then you later decide you want to live somewhere else and turn your current PPOR into an IP with the maximum amount owing and have all that spare cash to pay off your current PPOR (into an offset)

 

[Aaron_C]

How is offset different from a redraw facility.
Like with ANZ, I can redraw from what I have paid over the minimum required installment without any redraw fees. But has to be minimum $2k redraw.

Wow....I thought you had a broker? How could you not know this difference???

 

[Rolf Latham]

How is offset different from a redraw facility.
Like with ANZ, I can redraw from what I have paid over the minimum required installment without any redraw fees. But has to be minimum $2k redraw.

Hi San

I like to put it like this

1. With redraw the bank has to ALLOW you to withdraw advance repayments. Careful reading of your contract with the lender will show that redraw is at their disretion..............Money in an offset acct is yours

2. If your intention is to either die in your existing prop, or ALWAYS sell to upgrade, then redraw is ok. If neither of these is for sure, then the future tax implications of a redraw ( or loc) can be financially REALLY bad

ta
rolf