Put $500k into 4 offset accounts ?

Hi members,

I would like to have a better understanding of how this works before I approach the bank.

I have 4 investment properties, each has approx. mortgage $250k with CBA.
Total home loan = $1 mil.
All 4 home loans fixed for 3 years at 2.19% with effect from Oct 2021.

My mother had left me $500k in cash.
I know nothing about shares, and I do not wish to buy any more property.

Seeking your advice on :

1. Is it advisable to pay off two of my IPs, hence leaving Total home loan = $500k ??

or

2. I open four Offset accounts linked to the four home loans, and reduce interests ?


is this how offset accounts work ?

Thank you in advance.

 

Unless you're bad with money, why pay off the loan - stick it in an offset account so you have the money there in case you need it. It will offset the equivalent in loan value, so in terms of interest, you will pay not a dollar more than if you sink $500k into your loan.

As for the second question - if they're all the same interest rate, it's irrelevant where it goes. There's no need to open 4 offsets - one will suffice (or two if each loan is $250k).

 

rather than paying off the loans an offset might be better as you can save the same amount o finterest but have the flexibility. But you cannot have an offset on a fixed loan with CBA

 

You need to check if the fixed rate loans allow offset though. Many fixed loans don’t allow offset account.

 

I will be liable for penalty if I break the fixed rate loan, but I will check if it is worth it to do so for offset account benefits.

 

Remember you'd only need to break 2 out of your 4 loans.

And yes it might be worth it, to hold onto $500k of liquidity.

 

understand now. Thank you members for your valuable advice

 

No advice, you've heard from the experts.

Just want to say sorry for your loss.

 

Me too, waiting… not sure for what exactly.