mortgage offsett account

[doozer]

I have 2 IPs (loan 1 = $56K owing + $27k LOC; loan 2 =$171k ) both on IO fixed rates although the LOC is on a variable rate. My question is that instead of having say e.g. $10k sitting in a savings acc. earning say 4.5% I was told to put this money into a mortgage offsett acc for one or both of the IPs (I presume the $171k one is better??). However both lenders for each IP tell me they won't allow mortgage offsett for fixed rate loans. What are my options??

 

[Rixter]

Hi Doozer,

Options are -

Put the funds into reducing the principle on any other non tax deductable debts you may have first.

If none, then, place the funds into your LOC and use the LOC to fund more investments ( ie IP's etc)

 

[Simon]

By all means put the money into your LOC but understand if you use it later for non income producing expense (travel, private car, etc) then your LOC will not be fully tax effective.

An offset account would be perfect for you.

If you have a family member who is earning no income such as a spouse or child then a deposit in their name might help a little. ING has some good at call rates I believe.

 

[bundy1964]

Can you get an offset ac on a LOC?

bundy

 

[Rolf Latham]

Hiya Bundy

By definition, generally NO.

A fully revolving LOC doesnt have that facility from any of the lenders that I know of, BUT many of the modern term loans are very very similar in operation to a RLOC BUT also have the ability to link a 100 % offset.

examples include

STG, 15 yr I/O loan with 100 % offset
ANZ, 10 yr I/O loan with 100 % offset
WBC 5 yr I/O loan with 100 % offset
Bwest 5 yr I/O loan with 100 % offset


True RLOCs are almost dead :O), certainly we rarely use them for core lending.


ta

rolf

 

[bundy1964]

Thanks Rolf

Makes the loan minimiser look sick that my credit union offers

1.75% on 5k and they say it is a good deal

bundy