VLOC Vs Variable Interest Rate Loan with 100% offset. Which is better for PI?

[Glam888]

Hi Ya

I was hoping someone can shed some light here.

I see these two types of loans as being similar but really what is the real difference and benefit?

This topic has probably been done to death but i'm struggling to know why I should change from a VLOC to 100%offset?

Which loan is better for PI?

Can any one please explain it in plain English.

 

[Rolf Latham]

Variable IO with Offset is usually better for most people

Why ?

Higher Loan to Value ratios

Often, better Interest rates

Less risk of loan being called in

Offset shelters your tax paid money ( savings and wages for eg) while still providing a tax benefit when these are redrawn from the offset. Do the same thing with a LOC and you will quickly kill the deductible portion of the debt.


Locs are better for

30 Year IO loan term ( vs 5 to 15 for offset term loan)

Capitalising Interest

One account simplicity

ta
rolf

 

[jamontoast]

is there not also another difference where a
- LOC will allow you to draw money from equity you have...

whereas
- an Offset is extra cash you put in another account which is counted against your loan
???


Can you have an offset account (against your property where the property already been paid off) where you can draw money from like a LOC?