Offset account cashflow problem...

Any simple solution to this situation.

Have a P&I loan on the PPOR for 300k
Currently have 310k in an offset account linked to this loan.
The repayments are around 2k per month and automatically deducted from our personal account to the P&I home loan.

Obviously we don't want the offset amount to exceed the outstanding loan amount by much, as we won't earn interest on any excess funds.

Is there any easy solution to arrange this so we don't have to continually transfer the monthly excess back to our personal accounts?
It's only recently exceeded the outstanding amount, so the issue is a new one to us.


Thanks
Ace
 
The problem with a P&I loan with an offset account is you still need to make the repayments on a regular basis. The easy way to solve this is to switch to interest only repayments. As only the interest repayments are taken, the minimumum repayment amount would be zero.

If you plan to use the funds for investment purposes at some future point, you should consider transfering the funds from your offset to your loan as a redraw. This would allow you to claim tax deductions on the loan if it is used for investment purposes in the future.
 
I clicked on the link as I too have an offset account... I wish I had the same problem as you though! :D

Have you considered buying an IP with your funds? what are the funds in the offset for?
 
The easy way to solve this is to switch to interest only repayments. As only the interest repayments are taken, the minimumum repayment amount would be zero.

How easy is easy?
This would be good if it was a simple proceedure.


If you plan to use the funds for investment purposes at some future point, you should consider transfering the funds from your offset to your loan as a redraw. This would allow you to claim tax deductions on the loan if it is used for investment purposes in the future.

Possibly will need the money, although we would access funds elswhere first, so would only use these funds for an emergency.

I clicked on the link as I too have an offset account... I wish I had the same problem as you though! :D

Have you considered buying an IP with your funds? what are the funds in the offset for?

Tess, you're doing fine, how is baby Tess coming along?
Looking to buy IP's, but not counting on using these funds.
The funds are in the offset to cancel out the PPOR home loan, don't know where else to put the funds.


unless the PPOR loan is with St George and few others

There, an IO loan and 100 % offset works the same as a PI loan elsewhere

ta
rof

Hi Rolf,

Loans are with Homeside.
Can I easily switch from the current P&I to an IO loan with Homeside?


Thanks
Ace
 
Baby Tess is in the works... couple of months to go still.


Looking to buy IP's, but not counting on using these funds.
The funds are in the offset to cancel out the PPOR home loan, don't know where else to put the funds.
Any particular reason you're not using those funds - or do you want to be able to sleep at night and know that your home is fully paid off?

Still sounds like you have more money than you know what to do with... you could always store it in my offset a/c... just an offer :D

Back on topic, definitely ring up your bank and enquire about IO loans - the actual procedure is very easy - usually they will give you an IO period for 5 years (to be reviewed and extended after that time).

Will your PPOR stay a PPOR forever? If it someday becomes an IP, best to switch to IO now for tax deductibiliy reasons.
 
Hi Softmonkey, thanks for that comparable link.

Looks like converting to IO would be the best option.
Likely to stay in PPOR for a little while before upgrading, so it's probably worthwhile getting this set up now.

Thanks all.
 
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