Do some lenders (non-bank) offer loans with an ‘offset’ account, which really works more like a redraw or LOC rather than a ‘true’ offset account?
Had a mortgage broker warn me that some lenders purport to offer offest accounts, but by their nature are not “true” offset accounts, and really are nothing more than a glorified redraw or LOC.
He went on to say that this could then cause accounting and tax complications if money was taken out of the ‘offset’ account and spent on living expenses.
JT
He is sort of right.
Yes many lenders offer sudo offset accounts within the mortgage loan itself and Yes if used with an IP loan can cause all sorts of tax issues with regards to interest deductibilty.
There are other reason why you also use an offset account but make sure that the one you choose is totally separate and is 100% offset rather than a portion.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Yes you have to be careful. One lender I spoke to the other day said they didn’t have an offset, but had free redraw which was the same thing. It is not!!
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Good to know. Thanks.
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