Offset or redraw if unsure if this will one day be an IP?

[Chloe]

I've currently got the MAV home loan with the offset account.
The only reason that i decided on this product was because this house might be my IP in the next couple of years.

There is only one income going into this account so there is not going to ever be a huge amount of $$ in the offset.
When/if this home becomes the IP, will the tax benefits be effective from the year that this becomes the IP? Or from the inception of the loan?

According to the cba person I spoke with, having between $7,500 and $10,000 in the offset is saving me approx $35 per month in interest....not really very exciting and far less than I expected.

Do you thing that I'd be at a great disadvantage if I just had a normal redraw home loan instead of the offset if in a few years my situation changes and this becomes an IP?

 

[Peter_Tersteeg]

To calculate the monthly interest saved in an offset account, multiply the amount in the offset account by the interest rate on the loan and divide by 12.

$10,000 x 5.6% / 12 = $46.67

I agree that it's not an exciting amount, but realistically $10,000 isn't a lot of money either. If you're looking at consistant savings over an extended period I'd hope that most people could put away far more than $10k over a few years.

Also keep in mind that the CBA MISA account is available on their standard variable products, including those under their professional package. The reason you pay the professional package fee is not really for access to their offset account. The main benefit of their pro pack is really for the interest rate discounts it gives you.

If you've got a small loan amount which doesn't good rate discounts and you don't expect to save much in the offset account, then there's probably better products for your needs. I'd even suggest that there's probably better lenders.

 

[jrc77]

If your existing loan is interest online with offset and you are not making an extra repayments into the loan (rather putting extra funds into the offset) then everything appears fine.

If you are making extra repayments into the loan and intend to draw them down at a later point then you will most likely run into tax problems down the line.

The amount of interest saved would be the balance of the account times your interest rate ... which for $10k at 5.5% is about $46 a month.

Regards,

Jason