Hi Everyone, I know it may have been asked before but i just want to know where is a better place to put extra mortgage repayments? Is it better to put extra money into an offset account for the mortgage or is it better to put the extra amount straight onto the mortgage? What are the benefits? Thanks Brian
Effect on future payments/interest cost is probably about the same. Big difference being money in the offset will be reusable because its your own money and so you can use it for anything investment or personal related. Whereas pulling money back out of the loan counts as another loan for tax purposes, and interest is then deductible or not depending on the purpose of the spend.
Offset. Because you can withdraw the money without permission whenever you like and do whatever you like with it. In the interim, you save mortgage interest. Conversely, if you pay the money onto the mortgage, you need to apply to get it back via redraw or equity release loan. If you were going for an equity release loan, you might not qualify under the bank's lending criteria at the time, and accordingly the answer could be "no".
Offset account - remains your money, spend it however you like. Pay it off mortgage - money now belongs to the bank. They may re-lend it to you, or they may not. Who do you want to own the money? Marg
Build Passive Income WITHOUT Buyers Agents! Build Passive Income WITHOUT Dropping $15K On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia » Learn HOW Now!