Are there any requirements in a loan to be able to get a 100% offset account??? E.g. do you have to have a certain minimum loan size.
Are they just something that every loan gets or are they hard to come by?
Also if i do have a 100% offset then i could do IO and then access all the offset monies, this is good, so you get IO for a certain amount of time say 5 years and then it switches back to principle and interest, but say you would like to keep it interest only. The bank should like this as they will continue to have a huge loan against you and thus they will think that they will get more interest, but you have cleverly got he 100% offset, so you get the benefit of reduced interest and the flexibility of getting your cash back easily, thus not incurring redrawing fees.
Can someone please go over this and see if it is right and if it will work.
If i buy a 180K prop on 95% finance and put the rest of my deposit(say 15K) into the offset, will this offset exist?? note the 15K is used for renos.
Thank you,
Christopher Fife.Chris
You may also like to refer to my response to your other post.
Certainly not every lender offers 100% offset especially on interest only but there are a few and a good mortgage broker should be ale to identify these for you. In effect if you have a loan of $195K and $15K in your offset then your monthly interest expense will be calculated on $180K.
As and when you withdraw the $15K from the offset the balance will reduce and the amount of interest charged will increase accordingly. The purpose for what you use the offset funds for is neither here nor there.
Remember if you pay down a loan and then redraw back to the original balance for investment purposes you will not be able to claim the interest as a tax deductble expense.
Richard Taylor | Australia's leading private lender
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