Offset account query

Discussion in 'Loans & Mortgage Brokers' started by BradJR, 9th Jun, 2021.

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  1. BradJR

    BradJR Member

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    Hi

    Have an IP which is going to Principal and Interest soon.

    Will pay off half the loan thru the sale of another property leaving a balance of $260,000 on the loan.

    If I keep my offset loan at 260,000 or thereabouts, what will my repayments be?

    Will I still have payments off the principal but no interest?

    Thanks
     
    BradJR, 9th Jun, 2021
    #1
  2. PropDir

    PropDir Well-Known Member Business Member

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    The repayments will remain the same, however you will just pay the loan off quicker.
     
    PropDir, 9th Jun, 2021
    #2
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    think twice about this
     
    Terry_w, 9th Jun, 2021
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  4. BradJR

    BradJR Member

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    Any reason?

    Will have to as the property we are selling is part of the mortgage on our rental
     
    BradJR, 9th Jun, 2021
    #4
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    that makes it even worse!
     
    Terry_w, 9th Jun, 2021
    #5
  6. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    P & I repayments are calculated on the original limit, the interest rate & the amatorisation period.

    If you pay off a significant part of the loan, you can request a limit reduction and reduce the repayments because the limit has reduced. If you do this you loose access to funds, which could have a significant opportunity cost.

    There could be all sorts of tax issues depending on how your loans are structured as suggested in your last post.
     
    Peter_Tersteeg, 9th Jun, 2021
    #6
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    Leave it in your offset.

    The repayments will be the same but the interest component of the repayment will be reduced and you'd pay more in Principle.

    If you have an PPOR then then you should try to refinance this investment loan to IO again.
     
    Tony Xia, 9th Jun, 2021
    #7