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Hi Renee,
Let me start by saying that a financial adviser or your bank are the people to speak with for specifics, however I can certainly offer you my opinion.
Depending on the way your loan is set up, it generally makes no difference whether you put money straight into the loan, or park it in the offset. If the offset is 100%, then the interest charged is exactly the same as if it had been deposited directly into the loan.
Normally, on any account with an offset facility, you will be able to redraw your advance payments. ie, if you pay $1000/month and your minimum payment is $800/month, each month you will go into advance by $200. So after 1 year, you will have $2400 advance payments. Your bank will normally let you redraw this amount.
As a comparison, if your minimum is $800/month, and you deposit $800/month into the loan and leave $200/month in the offset, the interest charged will be exactly the same, your loan will not be in advance, but you will have $2400 in your account at the end of the year.
Basically the same. The one thing I see as being different, is that money in your offset account can be drawn at any time, ATM, EFTPOS, BPAY etc, so it is easy to p*ss it away without being aware. Money left in your loan needs to be drawn out. Most banks have a minimum (say $1000 per drawn down) and charge fees (say 1 free draw down per month and $20 after that) and it normally takes a day or two until the money is available for your to spend.
This can be a good thing, if your intention is to save until a specific future date, however it can be a bad thing if you plan to use the money for renovations or to pay the rates.
I may sound like to broken record, but ask your bank, as every one has different rules, fees time frames etc.[
]Hope this helps,
Victoria
[email protected]Reason can answer questions, but imagination has to ask them. — Ralph Gerard
I agree with Tamara, variety is the key. I know you asked for reasons why to go into property, but let me express a few flip sides;[
]One good thing about shares, you can enter the market with much less opening capital. For example a managed fund, some start with as little as $100. Try to buy real estate with that little capital.
Or buying a few shares online with a fee of about $15. Plus of course the cost of the shares themseleves. This is @#$% loads cheaper than Stamp Duty, legals, bank fees etc.
Shares don’t have any on going expenses (maintenance, management fees) well at least not that I have encountered. But they do have highly tax effective dividends.
The biggy that most people have mentioned already, is the ability for a home owner to put in a bit of elbow grease and increase the value of her investment. And with imagination, this becomes a really fun challenge.
As I said, if you have variety in your portfolio you will increase your chances of doing well. Not just shares and property, but cash, managed investments, super, etc.
Victoria
[email protected]Reason can answer questions, but imagination has to ask them. — Ralph Gerard
Hiya Apollonia,The day I started to save money was the day I filled up a glass of water & put my credit card in it ! Then I put it in the freezer !!! [
]You’ll be surprised how less you use it, then even more surprised to know that it’s REALLY not needed as much as you think it is. [
]This concept of not having it on you can work on cash as well, ya can’t spend what ya don’t have. [
]Michael
just beI totally agree.
I have my boss split my money, 50 % to the bills (mortgage, phone bill, rates) 42 % savings and finally 8% ‘junk’ money.
$40 per week goes into my junk account. This is the only card I carry. I allow myself to spend it on whatever crap I like. This is my reward for not spending the rest of my money.
If I need to pay for something from the bills account, I have to get my card from home. This way I have to think about it. I try to pay all the bills once a month only, then put that card out of sight until next month.
I have only been doing this for a couple of months, but the pile of savings is growing [
]Victoria
[email protected]Reason can answer questions, but imagination has to ask them. — Ralph Gerard
Brilliant Victoria!! Congratulations on winning the Auction. Tell us about it the tension, the excitment etc etc. More details!
Steph.Success is 1% inspiration and 99% perspiration.
Oh Steph,
It was totally nerve wracking.
My BF and I went. I didn’t think I could bid, so I put him in charge. The bank had given us $277K to spend, but on the day we decided that $250K was our limit.
It started out at $100K and jumped quickly to $200K. The property is zoned for units, and there were a couple of guys who looked like developers who put in a few bids.
They started to call it at $210K and that is when Josh put in a bid. Another lady took this as her queue, but for some reasosn the developers bowed out.
From $240K I took over the bidding, we went back and forth with $1,000 at a time. She thought and though and struggled with each bid, and I jumped back before the auctioneer even had a chance to confirm it. I wanted to look like I had a bottomless pit of money.
It must have worked, when I called $250K she shook her head.
I was shaking like a leaf. I have never bid at an auction before and I knew that if she went $250,500 I had to say no. No emotion. This is an investment after all. No one would fall in love with a Government Bond and pay more than it was worth, just because the wooden floors would look great after a polish!!
When the auctioneer called it, I couldn’t believe we had done it! People all around were shaking our hands, even other bidders, and the next door neighbour too. She is lovely.
Now that we have it, and I have actually seen inside, which I had not done before today, I really like the house and I think that if we put a bit of work into it, it will be great. At this stage, I think we are moving in, and renting out my place (which is where we live now, and is just this side of cashflow positive).
A lot to think about over the next 30 days. Wish us luck!!![
]Victoria
[email protected]Reason can answer questions, but imagination has to ask them. — Ralph Gerard
Thanks for all of your suggestions everyone![:X]
Just a note to let you know that the bank gave us a deposit bond and get this….
We won the auction!!! [
]Our first investment.[^]
Rock on![8D]
Victoria
[email protected]Reason can answer questions, but imagination has to ask them. — Ralph Gerard
you could sell one of your children!just kidding
I don’t have any, I have a cat… anyone interested? He’s a ginger male, 2 years old, housebroken, persian… []
why is it such a good deal???try not to get emotionally involved!
Trust me, the numbers WORKHi all,
An option I am discussing with my lendor, is keeping the existing loan and getting a seperate loan for the extra, like a split loan…
This way there are no break costs, no pay out fees, no discharge costs, only a new establishment fee, $700ish
Currently I have a portion fixed, some variable and have applied for a third amount to be a line of credit with the equity. I thought I was going hear “tell ‘er she’s dreamin'” but instead the valuer is visiting on Wednesday to see if the equity is sufficient…
Wish me luck!![
]Victoria
[email protected]Reason can answer questions, but imagination has to ask them. — Ralph Gerard
Joint Venture partners.That sounds sweet… how do I find a Joint Venture Partner, other than asking around or holding a seminar![
][^][]Cheers again for all your help
Victoria
[email protected]Reason can answer questions, but imagination has to ask them. — Ralph Gerard
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