Making my offset work for me

When I was looking for me loan I got a lot of 'why would you want offset, all you should do is fixed IO or variable IO, you don't want to make extra payments on an IP'

Well you know what? I do. I even dallied with going P&I for awhile :) but I decided IO and offset was more flexible.

I am getting a residential offset account for the Trust so the plan is for thecuurent rent for the properties to go in as 'pay' and the small expenditure we do have to go on the credit card which will be paid off before Interest charges. We are currently CF + but at some stage during construction of the new units we'll go negative so I'd like the offset to keep that at bay. When construction finishes and rent starts coming in we'll be back to CF+
Then the plan is to keep money in the offset and maybe use that as deposit for another IP.
Who has offset and how do you make it work for you.
 
When I was looking for me loan I got a lot of 'why would you want offset, all you should do is fixed IO or variable IO, you don't want to make extra payments on an IP'

Well you know what? I do. I even dallied with going P&I for awhile :) but I decided IO and offset was more flexible.

I am getting a residential offset account for the Trust so the plan is for thecuurent rent for the properties to go in as 'pay' and the small expenditure we do have to go on the credit card which will be paid off before Interest charges. We are currently CF + but at some stage during construction of the new units we'll go negative so I'd like the offset to keep that at bay. When construction finishes and rent starts coming in we'll be back to CF+
Then the plan is to keep money in the offset and maybe use that as deposit for another IP.
Who has offset and how do you make it work for you.

I think the number one benefit of offset vs redraw is that your money stays YOUR money.

On an IP, if you have 100 000 cash to park against an IP loan but want it back for say a car or a PPOR deposit, then redraw will really mess with your tax deductability, offset leaves you untouched.

This can have positive tax implications and in extreme cases asset protection provisions.

Many lenders regard redraw as THEIR money.................... read your T&Cs on redraw regarding your own loans and you may see what I mean

ta
rolf
 
If you a dealing with a trust you must also remember the trust's money is not your money. You must keep trust money separate from personal money and should not mix the two. You should do this for a few reasons one being asset protection and the other the laws of fiduciaries. You would be breaching the terms of your trust, or the trustee would, and this could lead to all sorts of problems with a beneficiary suing you as trustee down the track etc.
 
If you a dealing with a trust you must also remember the trust's money is not your money. You must keep trust money separate from personal money and should not mix the two. You should do this for a few reasons one being asset protection and the other the laws of fiduciaries. You would be breaching the terms of your trust, or the trustee would, and this could lead to all sorts of problems with a beneficiary suing you as trustee down the track etc.

Thanks Terry. Yes we will be keeping everything separate. The offset and credit card is only for Trust money going in and Trust money going out - deposit on another IP.
 
When I was looking for me loan I got a lot of 'why would you want offset, all you should do is fixed IO or variable IO, you don't want to make extra payments on an IP'

Well you know what? I do. I even dallied with going P&I for awhile :) but I decided IO and offset was more flexible.

Nice one, I agree with you wholeheartedly!
 
Jeez I love this place. So many people on my wave length :)

Negative gearing is not the be all and end all - I don't want to pay maximum interest - I want to pay minimum interest and make money for the next project.

Besides that it's a Trust and no negative gearing.
 
Thanks Terry. Yes we will be keeping everything separate. The offset and credit card is only for Trust money going in and Trust money going out - deposit on another IP.

Good to hear. And you should always have an offset account for a trust as otherwise the trust money will be sitting in some savings account earning diddly squat while the trust is paying high interest on the loans.
 
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