Offset Accounts and P&I repayments

Discussion in 'Loans & Mortgage Brokers' started by Propertyman, 9th Feb, 2017.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Propertyman

    Propertyman Well-Known Member

    Joined:
    8th Jul, 2016
    Posts:
    103
    Location:
    Sydney
    Hi guys,

    This is probably a stupid question, but if you have an offset account set up against a principal and interest loan, does the money in the account offset the original loan balance or the reduced balance as you have paid off some principal? for example, if you have a loan of $500k paying P&I and have reduced it to $400,000, does the money in the offset go against $500k or $400k?

    Thanks in advance
     
    Propertyman, 9th Feb, 2017
    #1
  2. Corey Batt

    Corey Batt Well-Known Member

    Joined:
    14th Jun, 2015
    Posts:
    2,091
    Location:
    Adelaide, SA
    the funds in the account will offset the current amount owing (the balance), not the original amount (the limit).
     
    Corey Batt, 9th Feb, 2017
    #2
    Brendan Johnson and Ross Forrester like this.
  3. Propertyman

    Propertyman Well-Known Member

    Joined:
    8th Jul, 2016
    Posts:
    103
    Location:
    Sydney
    Great thanks Corey
     
    Propertyman, 9th Feb, 2017
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,640
    Location:
    Gold Coast (Australia Wide)
    little trap is that the FULL PI repayment will still apply, on a PI with offset regardless of the amount in offset - still saves interest, but the principal reduces

    ta
    rolf
     
    Rolf Latham, 9th Feb, 2017
    #4
    albanga likes this.
  5. Propertyman

    Propertyman Well-Known Member

    Joined:
    8th Jul, 2016
    Posts:
    103
    Location:
    Sydney
    Thanks Rolf i thought that was the case
     
    Propertyman, 10th Feb, 2017
    #5
  6. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,943
    Location:
    Australia wide
    And it costs something like $46 per year for a company
     
    Terry_w, 10th Feb, 2017
    #6
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