LOC + NIVA vs 100% Offset

Thanks Rolf.
Back to numbers...

PF explanation of the MRP revolves around saving a lump sum and sweeping it to the loan every time we reaches a particular amount - thus paying off majority of the principal by doing so. They're saying that offset only saves the interest and therefore not reducing the loan as fast as the MRP.

Is there really a difference between paying a lump sum into the loan or just keeping it on a 100% offset account? Or, will it be the same effect if I transfer a lump sum from the offset to the loan from time to time?

Thanks again for all the help.
 
parlayman said:
Thanks Rolf.
Back to numbers...

PF explanation of the MRP revolves around saving a lump sum and sweeping it to the loan every time we reaches a particular amount - thus paying off majority of the principal by doing so. They're saying that offset only saves the interest and therefore not reducing the loan as fast as the MRP.

Is there really a difference between paying a lump sum into the loan or just keeping it on a 100% offset account? Or, will it be the same effect if I transfer a lump sum from the offset to the loan from time to time?

Thanks again for all the help.
Click to expand...

U said back to numbers.............Where are the numbers :)

I think the only sweeping going on is the huge TRAIL commission thats being generated by that nice extra fat margin :(

ta
rolf
 
horrible set up and what's worse is the property is probably going to cost more than the bad loans, likely to be overpriced, in a bad area wit poor rent returns and limited prospects for growth

i bet they are getting paid to sell that new place to you. and they have x-coll so u don't see the valuation.

run and don't look back, even if u r stuck with property get the new broker to change everything including the loan for the purchase
 
parlayman said:
Thanks Rolf.
Back to numbers...

PF explanation of the MRP revolves around saving a lump sum and sweeping it to the loan every time we reaches a particular amount - thus paying off majority of the principal by doing so. They're saying that offset only saves the interest and therefore not reducing the loan as fast as the MRP.

Is there really a difference between paying a lump sum into the loan or just keeping it on a 100% offset account? Or, will it be the same effect if I transfer a lump sum from the offset to the loan from time to time?

Thanks again for all the help.
Click to expand...

only difference is offset is much better for u and MRP much better for them

dont let some scammers put u off property investment, just do it properly next time
 
This is one of the pages from the FIA presented.

They've taken into account that we are paying $3,500 into the loan and we have a surplus fund of around $1,700 which we can put aside and save every month.

Not sure what magic calculation they have in here. :confused: :eek:
 

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im baaaaaack


322 PI over 30 years at 7.7 has an average monthly repayment of 2320 approx

322 PI over 30 years at 6.9 is 2121

Difference of 200 a month, just on the product interest

if you were to go across to the 6.90 offer from the independent broker and pay the same as on the ING loan ( 2320) the loan term would be reduced from 30 years to 24 years.

Now, if we use the figures used from ur report and the assumptions u have provided, the repayment per month is 5200 ............ that means using a SIMPLE lo interest offset account product the term is 6 years and 4 mths

saving

23 years at 2320 a month x 12 =


I will leave you to work it out


-----------------------------------------------

In addition, if you do a little more work you can actually


1. Get a better rate than 6.9
2. Structure it so the tax benefits provide direct flow through to the PPOR mortgage, thus reducing the 6.4 a little little years further
3. If you are game, get into a MRP and debt recycling program ( using shares or property) that actually works without tipping in huge additional payments.

There is no magic in the plan you are currently on, its simply reusing your (Non existent ?)savings every month based on your provided budget.

I am making a BIG assumption, but Id say the sooner you jump ship, and get someone next to you thats on YOUR side, the better off you will be financially, because there will be "less hands in the pot"


BTW

when was the last time you put away 1700 for the month and didnt use it further down the track ( and accumulated say 40 k over 2 years ?)

More to the point of the pln provided when was the last time u save 3 k a month and accumulated 72 k over 2 years

I ask that, because thats what fuels that plan that has been drawn up for you


ta
rolf
 
Rolf,
First, thank you very much for taking time and providing your inputs. Much appreciated.
As you mentioned in one of your earlier post, it won't beat any cashflow analysis.

From the looks of it, it is an MRP that requires huge additional payments. And you're right in asking when was the last time we had the surplus of $1,700 and didn't really use it. To be honest, I cannot really remember. :eek:

Wish me luck in trying to jump out of this ship.... :eek:
 
Terryw said:
Place all wages, incomes and rents etc into the offset and any investment expenses should be borrowed from the LOC.
Click to expand...

Just wanted to clarify on this. Deposit and purchase costs will be coming from LOC. What about the actual repayments for the IP and ongoing expenses (i.e. maintenance, landlord insurance, etc.)? Are they coming off LOC as well? And then we pay the balance of LOC from the offset? :eek::confused:
 
parlayman said:
Just wanted to clarify on this. Deposit and purchase costs will be coming from LOC. What about the actual repayments for the IP and ongoing expenses (i.e. maintenance, landlord insurance, etc.)? Are they coming off LOC as well? And then we pay the balance of LOC from the offset? :eek::confused:
Click to expand...

Generally you would only pay the interest on the loc and use cash from the offset for this and the IO loan repayments

If u want use the loc to pay for the IO loan then you will need professional advice.
 
Rolf Latham said:
doesnt need much luck, just a decision and then action :)

ta
rolf
Click to expand...

We did take action. Contacted our lender directly. They can put us in exactly the same structure on 6.74% rate - both for P&I and LOC with $3K NIVA card. That is coming from 7.64% (P&I) and 7.89% (LOC) rates of our current structure.

They'll treat it as an internal refinance so exit fees will be waived. I suppose we're on the right track of fixing our current mess....
 
Thanks Rolf!
Glad to find this forum. Would have been even better if I found this more than a year ago...But anyhow, better late than never... :)
 
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