Liberty offset account

Hi All,

Has anyone had an experience with the offset account that comes with Liberty Star loans? When I spoke to their service desk, they advised that the offset funds are held in a NAB account. Since Liberty is a non ADI, is using their offset account really unsafe for large sums of money? ie. In what circumstances would the money in the offset be insecure? Id rather put the money in an offset rather then redraw for accounting purposes but from a security perspective, would putting the money in redraw be safer?

From the fine print on their website:

"Any available redraw funds held in the offset facility connected with your loan account will be used to reduce the amount of interest you pay on your loan. Liberty is not a bank. The offset facility on your loan account is not covered by any Government guarantee."

Any input appreciated.

Thanks.

 

If the money is held in an NAB account, then I would say its alot safer then putting it in a Liberty account directly.

The fine print seems pretty standard.

 

Can brokers provide more detail.
The ‘offset’ funds might be held with a bank, but not as individual accounts for each borrower. In that sense it is more like all shares held by a broker under one HIN.

so if a lender goes down, then the borrower cant ask for their individual ‘offset’ from the bank. Though the ‘offset’ will most likely be used to reduce the mortgage so the borrower wont ‘lose’ anything other than liquidity?

this is different to the fear that some seem to have, that they will actually lose the money in offset and still owe the same amount.

 

you owe them more money than they owe you. What aspect is risky?

 

As an institution Liberty is more risky than the banks but they've been around for at least 20 years, navigatged the GFC quite well and have seen multiple market cycles. They're really not that risky.

If you're contemplating using Liberty, it's either becuase you have bad credit, or you're trying to extend your borrowing capacity well beyond what regular lenders will accomodate. In short, the most risky element of this relationship is probably you, not Liberty.

If something were to go wrong, Liberty would owe you the money in the offset account, but you'd owe them for the loan outstanding. The net result would be that you loose the money in the offset account but owe them less money on the loan.

 

The concern was around having to deposit the money into an account that isnt under my name. The process is that I deposit the money into a bank account in Liberty's name (held by NAB Ive been advised) with the reference number of the transaction being my offset account number. Liberty then do some rejig in the backend to offset my mortgage. Given this, if something had to happen to Liberty's bank account where Im transferring the funds into, what happens to my account? I guess this is different to how my other offset accounts work with ADI lenders hence the query.

 

Set off. If you owe X $100,000 and X owes you $20,000 your net debt is $80,000. This is what you would owe X if he became insolvent.

 

Wow, I am considering Liberty/Pepper as they are offering much bigger loan compared to top tier. Timw to reconsider!