Browse Forums General Discussion 1 Jan 19, 2012 12:30 pm Hi all. Let's say you have $300,000 home loan with 100% offset account over 25 years @ 7.25%. Your standard weekly repayments are about $500. You are willing to pay $1000 per week on your loan. Would you: Pay $1000 on your home loan OR Pay $500 on your home loan and $500 in the offset account OR Pay interest only (about $420) and put $580 in the offset account? What you be the better option in the long run and helps you to repay you home loan faster? Thanks Re: What would you do with your home loan? 2Jan 20, 2012 11:17 am If you put it in you offset you can get it out again if you need it, but generally if you make your standard monthly payment more than the minimum it just pays off the principle and you can't with draw it. If you want to be able to with draw it again for any reason(even just as a back up plan) then I would make a separate payment so that you can access it again if you need to. In the end if you get to the point of nearly paying off the mortgage you can always just pay it into the principle and be mortgage free or you can use the money saved to spend elsewhere. Personally I have done both and it has meant we had a significant lead on our mortgage and still had funds to draw on when we rebuilt. As a side note I didn't think any bank would let you put money into offset on an interest only loan? Re: What would you do with your home loan? 3Jan 20, 2012 8:11 pm Quote: you put it in you offset you can get it out again if you need it, but generally if you make your standard monthly payment more than the minimum it just pays off the principle and you can't with draw it. If you have a re-draw facility, you can. We had a re-draw facility with our loan with credit union and could re-draw any extra money - it didnt matter whether that extra money had got there by paying more than minimum every pay or by lump sums. Re: What would you do with your home loan? 4Jan 20, 2012 10:55 pm Ok.... I work for a bank and this is what I would do and why. I would put enough in the home loan to make the minimum repayment (in this scenario, $500) then put the rest in the offset account. When I've reached the minimum amount required for redraw from my home loan (let's say it's $2000) in the offset account, I would then transfer that money to the home loan.... And keep paying it into my home loan until I need to redraw the money! This is only because of the way I work with my own money. If I see it sitting in an account as part of a credit balance, then I am tempted to use it. If it's paying off my home loan quicker, then that's better for me and it's not sitting there looking like it's not doing anything, wanting to be used up! Where I work, you don't pay a redraw fee (customers and staff!), so there's no "penalty" for taking it out of the home loan.... Except that now your debit balance has gone back up again! Oh, and once you've taken whatever the minimum redraw is, out of the loan, you can put whatever amount you didn't use, back into the loan.... If you want to. This is because of the type of loan I have!!! Always check with your financial institution what the costs and benefits are for the particular type of loan you are going for! They should explain all of these to you before you sign up The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19068 Thanks mate. Yeah good points! Leaning towards Option 3 to get a bit extra space in the cabinets but not going too crazy high (and expensive). Would require a mini… 13 39468 Bought in Nov 21 at the height of the market (classic). Good area, atrocious floor plan. BUT has land out to the left-hand side that we can extend out on (see second… 0 8766 |