I'm thinking about refinancing IP from CBA to STG (st george)

Fullyluckys posts on Somersoft were gold .... you have to give hime credit, he still gets bites!!

 

The $5 is on the offset account. Not the Loan account. So you don't pay down the loan, but if you have an equity extract, you need to "clean" the loan before you invest the funds.
(The $5 is still payable even if you have the $400 package fee).

 

I don't pay the $5 fee. It's part of the $400 package. It must have changed. Mine is from 2014.

 

The first offset is waived under the advantage package.

Additional offsets incur a $5 admin fee and $5 offset fee ie $10 per month.

The offset fee is waived is $2000 is credited to the account every month whilst the admin fee can be waived by the branch.

CBA you can have unlimited offsets for free under the package.

 

Additional Offsets are also free if the Offset is debited for the monthly loan payment.

Depends on how many loans and offsets you actually have.

I've got several loan accounts (each with their corresponding offset).
Loan A ($110k owing) + Offset ($5k) <-- Loan Repayment comes out from Offset, no fee charged
Loan B ($120k owing) + Offset ($5k) <-- Loan Repayment comes out from Offset, no fee charged
Loan C ($130k owing) + Offset ($130k) <-- Loan Repayment comes out from Offset, however as the actual amount is fully offset, no payment is required, so I allocate the free offset to this account, so no fee charged.
Loan D ($140k owing) + Offset ($140k) <-- Loan Repayment comes out from Offset, however as the actual amount is fully offset, no payment is required, but i have no more free offset accounts, so this one gets hit with $5 a month.

I let STG charge me several months of fees on Offset D. This resulted in Loan D being charged 4c in interest per month. I was hoping this would result in them taking a loan payment of 4c each month, so i wouldn't get charged the $5.... didnt work.

So for Loan D, i transferred all the funds from the offset into the loan, however because it is STG, the loan actually stay open.

Then i transfer $2k in to Offset D and transfer it back out on the same day to get around the $5 monthly fee.

I have a similar setup with CBA... no fees charged.

 

ok - so loan D future tax deduction is gone. As you have repaid the loan. The 'use of funds' is cash sitting in an offset account (noting its not an issue right now, as its fully offset in any case)(only has an effect when you transfer the cash out of the offset, and start paying interest - its not deductible any more).

Note that I dont know what the original purpose of the loan was, so not sure if it would be deductable now-or in the future - in any case.
Im just pointing out one of the risks of the SGB product.

Blacky

 

@Blacky i think you misunderstand what I am saying.

Loan D is an equity release.
In this example, $140k was released and sitting in the offset account..... just waiting for an opportunity. But given the stupid $5 fee, i transferred the entire $140k back into the loan so there is still $140k in available funds in the loan just waiting to be withdrawn and used for whatever purpose.

Loan D at present has no tax deduction as it hasn't been used.

The risk that I face with doing this (to save $5) is that STG may choose to claw back any unused loans meaning I won't be able to access these funds should that ever happen. I had the accounts set up like this pre-apra and nothing happened for several years.

 

I

You should get your mortgage broker do negotiate a better rate for you. You should have a reply within a day max.

 

Is that even legal?

Interest should be calculated on the daily balance minus any offset account. and charged monthly. I thought every bank does this?

But if they calculate the offset and subtract it from the average interest charged? wouldn't it be the same? assuming they factor in any compounding affects. I don't see how that's complex.

 

yeah everyone knows it's free for computers do the the calculation of offsetting. It doesn't cost them anything I don't think it's justified to charge $5 "admin fee". Do they expect people to think people are calculating these with a calculator?

 

You were right. They even backed to the date i accepted their new rate. I still felt they were able to go lower thou.

I will save over $800 a year now with the new rate. Thanks everyone.

Thread closed.

 

That's great to hear @fullylucky! The positives of having a broker as your wife