Money in Offset Account or Loan Account?

Would there be any different in interest calculation or if I put our saving money into Offset Account vs Loan Account?

We are with Resimac.
I just moved $100k from our Offset Account to main Loan Account.
Which makes $100k to be redrawable.

Comments

  • +2 votes

    Money in Offset Account or Loan Account?

    Offset Account

    Would there be any different in interest calculation

    There shouldn't be.

  • +19 votes

    just moved $100k from our Offset Account to main Loan Account.
    Which makes $100k to be redrawable.

    Bad move, Especially asking questions about it after moving it not before.

    While there's no impact to the interest rate calculation money in an offset is superior to money in a redraw. Your redraw is only available with approval from the bank, offset is your money to do whatever you like with. There also different tax treatment if you ever use the property as an investment.

    Possibly the only reason you'd ever move money out of the offset is if you were going to go over the $250k ADI guarantee limit, but if you thought your bank was going to need this the last place you'd put the money you removed is into the loan account.

  •  

    I'm also with Resimac. As jv said, shouldnt be any difference in interest calculation and it's better to park the money in the offset portion.

  • +2 votes

    Always Offset!

  • +1 vote

    Which makes $100k to be redrawable.

    Having the $100k in your bank account (offset) is better than redrawable (pretty much lenders account).

  •  

    No change in interest calculations.

    As most people are wondering what is the reason for doing the extra bit of work?

  • +2 votes

    i was always told not to put it into the redraw account as if you pull it out makes tax time more interesting! ( if its an investment property or you turn a owner occupied into an investment property)

    quick google search comes up with "If you redraw any extra cash out of your investment loan, you will limit the loan's tax deductibility if the cash isn't used for investment purposes."

  •  

    too late. you have moved it into loan account. It only makes a difference if your loan is for investment purposes.

  •  

    Offset all the way - Make sure you have a 100% offset too because some are up to a certain balance.

  • +1 vote

    Offset! Always offset!

  • -1 vote

    The loan account is a good place to park unused cash. The extra steps one have to take to get it out helps to reduce discretionary spending. Think of it as keeping gold in a cold wallet.

  •  

    Thanks everyone!!

    Dang. bad move I made.

    Sorry, I should have added more information.

    So this loan account is not for Investment property but Owner occupied and it is Principal & Interest type of paying.
    It has 100% offset as well.

    Resimac Offset Loan Account gives us 2 accounts, Loan Account and Offset Account.

    I moved it to Loan Account, because I am thinking it will offset the main loan more, but apparently I was wrong.
    Will move it back to Offset account then.

    • +2 votes

      Not that you should listen to the internet, but you are better off moving that money now all to your offset and have full control.

      Even especially with bank that isn't the big 4

      •  

        Thanks.

        It just a couple month ago, I couldn't find any financial benefit in term of interest payment if I leave the money in the Offset, where with the Redraw, we can basically doing the same thing. :)

        •  

          I think you check with your bank on this, not sure you can just move it from redraw into offset as you wish. There are rules per bank about frequency and amount you can take back out for payments into the redraw. It would probably be outlined in your original mortgage documents.

        • +1 vote

          we can basically doing the same thing. :)

          Not the same thing. You have to ask for the money back with loan account/redraw, with offset you don't because it's yours.