Hi
which one is better?
To put a lump sum money in a mortgage offset account which equates to the outstanding home loan balance at 5.94%, or
To invest this lump sum money in a term deposit earning 6.0% ?
We don't want to pay out our own home loan as it could be turned to an IP in near future.
Thank you for the advice!
Nani
Email MeThe road to success is always under construction
G'day Samson,
If it was me I would be putting the cash in the offset account, as you said you are saving 5.94% interest on the balance and have instant access to your cash, however putting the money in the term deposit means you will pay income tax on the interest made and have to wait to draw out your money.
Food for thought.
Nicholas
Definately the offset account. An expression I use often is:
Penny saved is a penny made – and often tax free!
You would have to earn a higher amount of money (and therefore take risk) then pay tax on that money to make the same as what you would save with the funds in the offset account. Word of warning however, ensure that you put extra money saved (from paying less interest) into the offset account as well. In fact, if you're going to turn it into an IP, try and make the loan I/O and put all extra repayments into the offset.
Best of luck!
Thank you very much, guys!
We have kinda decided to put the money in the offset a/c – it is nice to have confirmation that we are doing the right thing.
FinSpec, interesting view there – one that we haven't thought of !!
Nani
Email MeThe road to success is always under construction
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