Offset Accounts vs Redraw

Many waive the first year. Some might further years if you beg.

For $400 pa there's better things to spend time on I reckon.

 

True, but if they tell you, upfront, that they'll be doing this, then it's certainly worth keeping in mind when considering your options.

 

I haven't experienced anyone waiving their annual fee for more than the first year. Have you?

 

Yep

- I'm definitely an amateur! seems like general opinion is that offset is worth the extra upfront cost and possible higher interest rate. Wish I'd been onto splits earlier too....

 

Perhaps speak with a broker. These rates don't appear 'competitive'.
My PPOR rate is 3.61. Redraw account, no offset. No fees.
My IP rate is 4.21 with offset, $395 yearly fee.
Plenty of excellent brokers on here.

 

Ok, so I need probably need to refinance to renovate IP1, but I'm keen to get started on land and construction purchase for IP2. I'm unsure as to what capital growth will result from renovation of IP1 (rented to family member so below market rate, not changing no of rooms).

I'm in a low tax bracket, so challenge is to set up loans correctly to minimise cost/mixing.

Can I avoid having to pay for an offset account if:

- refinance IP1 (lvr prob 90%) with a 40k split (then renovate IP1)
- work my butt off and pay down split
- then use 40k split redraw as deposit for IP2

No plans to go further than 2 IPs, no PPOR. Any comments? thanks

 

U maybe want to max borrowings for future poor.

What u propose is ok in theory.

 

Thanks Terry, plan is for IP1 to become PPOR in 15-20 years. Currently our housing provided by employer.

 

I would favour offset/ pro pack over basic loan too, especially as your investment portfolio grows. Used correctly offsets are a great money saver.