Query I have following on from Sash's comment:
from this thread.
This is probably more a Q for the brokers...but is that true?
I would have thought have 100,000k in an offset where the loan is at 7% would be better then having 100,000k in a term deposit of 6%...
In the offset scenario, you are not gaining any extra income but you are not paying 7% interest on that 100,000k
In the term deposit scenario, you are paying interest at 7% on that 100,000 (which could have been in the offset account) and earning 6% interest from having it in a term deposit.
If Sash's comment is correct, is it to do with the serviceability calcs, ie. banks will take into account entire loan and current interest rate and disregard what in the offset?
Appreciate anyone's thoughts...
Lj
Couple of suggestions to increase your serviceability...
...
11. Rather than keeping funds a Offset look to put it in a deposit account as this will increase your income via interest.
from this thread.
This is probably more a Q for the brokers...but is that true?
I would have thought have 100,000k in an offset where the loan is at 7% would be better then having 100,000k in a term deposit of 6%...
In the offset scenario, you are not gaining any extra income but you are not paying 7% interest on that 100,000k
In the term deposit scenario, you are paying interest at 7% on that 100,000 (which could have been in the offset account) and earning 6% interest from having it in a term deposit.
If Sash's comment is correct, is it to do with the serviceability calcs, ie. banks will take into account entire loan and current interest rate and disregard what in the offset?
Appreciate anyone's thoughts...
Lj