Hi Matt

An offset account is a transaction account linked to your home loan. You reduce the amount of interest payable on your home loan by having money sitting in your offset account.

So for illustrative purposes, if you had a $10 interest only home loan with $1 in the offset account, you'd only be paying interest on $9.

ANZ's website has a good description http://www.anz.com.au/personal/home-loans/choose-home-loan/extras/offset-account/

Cheers

Jamie

Shahin's right – WBC are super fast with turning around deals. Was there a valuation involved? That can slow approval times up as credit will be waiting for it to be returned. They may have also requested additional info from your broker which will slow things down a bit.

Cheers

Jamie

I agree with the others – it's pointless. At this stage I'd just focus on settling the deal.

Cheers

Jamie

No worries at all.

Like Richard said – interest only with an offset would be your best option. This blog post explains the concept in further detail.

Cheers

Jamie

Hi Matt

Welcome aboard.

First part of investment financing is to not obsess about rates. It's good to get a competitive deal – but structure and lender selection are more important than choosing the cheapest rate which could ultimately cost you more in the long run due to it being unsuitable for you.

With fixing, I always advise my clients to only fix if they need to know what their monthly repayments will be – and not to fix simply in an attempt to beat the variable rate…it doesn't often happen.

Fixed rate loans are generally inflexible – with most lenders not linking an offset or allowing unlimited additional repayments, redraw, etc. If you're certain that fixing is the way to go – then I'd still consider setting up a portion of the loan as variable so you can still take advantage of flexible features such as an offset.

What are your longer term plans with this property? Are you going to want to access equity in the future? Is it going to be an investment property or owner occupied or will swap from one to the other later on?  What are your longer term plans with property investing in general?

Cheers

Jamie

Cheers

Jamie

It's amazing how they have the arrogance to make these reassuring claims. The person in credit who's actually assessing the application doesn't even know how the internal credit scoring works – so for the branch staff to give the "she'll be right" on a 95% lend is quite ignorant on their behalf…and could come back to bite them.

Cheers

Jamie

Hi Crighto

It depends on your goals, tolerance to risk and borrowing capacity.

I have some clients who would happily convert that $200k into a multi million dollar porfolio.

I also have other clients who are less risk adverse and might use it to purchase one or two IPs.

Work out where you want to be 10 – 20 years from now. Work out what you need financially and then set a course of action for reaching that end goal.

Cheers

Jamie

Hi needhelp

While 20 enquiries is quite a bit – it sounds like your file hasn't been too active over the past 12 months, is that correct?

If so – you should be ok. The cluster of enquiries from the car finance and credit cards can be explained. You need to be careful with car finance – they'll throw applications left, right and center.

If you've had good conduct with your existing Westpac credit card – that should get you some bonus points with credit scoring. Your employment type, borrowing capacity, length of employment and about a hundred other factors will also come into play.

Cheers

Jamie

Yeah I agree with that. It makes sense to fork out a few hundred on a flight to scope out a purchase that's in the hundreds of thousands.

Cheers

Jamie

Hi Jekjoy

Why not do both?

I've helped plenty of first home buyers purchase their first home – and then tap into its equity to fund the deposit/costs on an investment property.

It works really well when the home that's purchased can be renovated for a quick equity gain. We then get it revalued – access the equity and organise the IP loan . Some clients rinse and repeat this process with each property they purchase –  and build a decent sized portfolio.

I wrote an article for Australian Property Investor magazine on this exact topic – here's the link.

Cheers

Jamie