Where to park extra cash? Offset, Loan or savings account?

[Superhanc]

Hi folks,

I currently have 3 IP's and rent the house I live in.

Each 3 IP's are with a different bank.

Bank 1 is Fixed
Bank 2 is Variable
Bank 3 is a combination of Fixed and Variable. (240k fixed / 25k variable)

Bank 3 has an offset account linked to the 25k variable portion and this is where my salary / rent payments go into and loan repayments come from. (balance of the offset ranges from 10 -15k)

My question is we are currently saving and would like to put this money a side until we have enough to possibly purchase our PPOR. My question is - If I have approx 20k savings where should i put it?

Thanks you very much for your time!

 

[Pa1nter]

Hi folks,

I currently have 3 IP's and rent the house I live in.

Each 3 IP's are with a different bank.

Bank 1 is Fixed
Bank 2 is Variable
Bank 3 is a combination of Fixed and Variable. (240k fixed / 25k variable)

Bank 3 has an offset account linked to the 25k variable portion and this is where my salary / rent payments go into and loan repayments come from. (balance of the offset ranges from 10 -15k)

My question is we are currently saving and would like to put this money a side until we have enough to possibly purchase our PPOR. My question is - If I have approx 20k savings where should i put it?

Thanks you very much for your time!

I use to leave mine in the offset account but all I was doing was reducing my interest but now I use it in the share market and hopefully to get a better return.

 

[Jamie M]

I'd pop it in the offset set-up against the $25k loan.

If your savings is going to go above $25k than you may need to open another against the variable loan (loan 2).

Cheers

Jamie

 

[jonmardell]

By putting aside i assume you mean that you dont like seeing that extra 20k in your current transaction/offset account? You could setup and offset account against bank 2 loan and park surplus funds in there and continue to use the current offset account as a transaction account. If you are having trouble budgeting because your savings is is your main transaction/offset account you could setup a separate transaction account and have regular transfer into there when you get paid for what you are planning on spending that week/fortnight or month.

Hi folks,

I currently have 3 IP's and rent the house I live in.

Each 3 IP's are with a different bank.

Bank 1 is Fixed
Bank 2 is Variable
Bank 3 is a combination of Fixed and Variable. (240k fixed / 25k variable)

Bank 3 has an offset account linked to the 25k variable portion and this is where my salary / rent payments go into and loan repayments come from. (balance of the offset ranges from 10 -15k)

My question is we are currently saving and would like to put this money a side until we have enough to possibly purchase our PPOR. My question is - If I have approx 20k savings where should i put it?

Thanks you very much for your time!

 

[Aaron_C]

Put 20k savings in the offset account.

 

[MelbGal]

Hi folks,

I currently have 3 IP's and rent the house I live in.

Each 3 IP's are with a different bank.

Bank 1 is Fixed
Bank 2 is Variable
Bank 3 is a combination of Fixed and Variable. (240k fixed / 25k variable)

Bank 3 has an offset account linked to the 25k variable portion and this is where my salary / rent payments go into and loan repayments come from. (balance of the offset ranges from 10 -15k)

My question is we are currently saving and would like to put this money a side until we have enough to possibly purchase our PPOR. My question is - If I have approx 20k savings where should i put it?

Thanks you very much for your time!

Put it in offset account, unless there is another vehicle that is earning you more return than the offset interest rate. Mind you that you will be taxed on the difference anyway as income.

 

[robbiejuve]

You cant recommend shares unless you know timeframe and I doubt if current saving goal is PPOR that timeframe is long enough for shares.

Also note the word "hope" in the post about shares, that's all its about if you're investing in shares short term.

 

[KCprop]

If offset account is used as a transaction account would that have any tax implications? As doing so won't some of the monies but used for personal use?

 

[Terry_w]

If offset account is used as a transaction account would that have any tax implications? As doing so won't some of the monies but used for personal use?

An offset account is a transaction account! There are no tax consequences as there is no income from this account.

If you have borrowed and paid into a offset then you have potential problems to consider, but if you just use it as a trnasaction account then no consequences.

 

[KCprop]

An offset account is a transaction account! There are no tax consequences as there is no income from this account.

If you have borrowed and paid into a offset then you have potential problems to consider, but if you just use it as a trnasaction account then no consequences.

ahh, so if say I have a variable loan account of $50,000 which when given bank put the monies in my transaction account and I use $10,000 to pay interest on a fixed loan amount and transferred the reminder to the variable loan account which automatically created a MISA account. Would that have tax implications?

Can I then use the MISA account as a transaction account without tax issue say to put rent, salary, etc in and use it to pay bills some of which are personal?

 

[Terry_w]

ahh, so if say I have a variable loan account of $50,000 which when given bank put the monies in my transaction account and I use $10,000 to pay interest on a fixed loan amount and transferred the reminder to the variable loan account which automatically created a MISA account. Would that have tax implications?

Yes.

You are borrowing money and parking it and possibly mixing borrowed and non borrowed money.

You also seem to have borrowed to pay interest. ATO may apply Part IV to deny the deduction on this depending on your reasoning.

Thereafter mixing borrowed money in the MISA account would make it even worse.

In my view none of the interest on the $50k would be deductible.

 

[KCprop]

Yes.

You are borrowing money and parking it and possibly mixing borrowed and non borrowed money.

You also seem to have borrowed to pay interest. ATO may apply Part IV to deny the deduction on this depending on your reasoning.

Thereafter mixing borrowed money in the MISA account would make it even worse.

In my view none of the interest on the $50k would be deductible.

Thanks for the response Terry.

What should I do in this case? Should I put $10k in the MISA so I don't pay interest and should I not claim the interest from the MISA?

With paying for interest of the fixed loan in the future should I pay using MISA or from savings?

Also does that mean the variable loan of $50k, I shouldn't touch unless buying another IP and/or paying for expenses associated with such?

 

[Terry_w]

Thanks for the response Terry.

What should I do in this case? Should I put $10k in the MISA so I don't pay interest and should I not claim the interest from the MISA?

With paying for interest of the fixed loan in the future should I pay using MISA or from savings?

Also does that mean the variable loan of $50k, I shouldn't touch unless buying another IP and/or paying for expenses associated with such?

You should seek professional advice.