Switching Home Loan: Experiences with Moving Offset Funds over Efficiently with Minimal Interest/Fees Charged

OldBugger on 10/02/2023 - 14:43
Last edited 07/03/2023 - 18:13

I am currently in the process of moving to a new bank for my loan and offset. My offset account currently has more funds in it than the home loan, so I pay no interest.

I find that when I switch home loans (chasing cashback deals), it is difficult not to get hit with interest for the period between settlement and when my funds land in the new offset.

The two options I can use to move my offset funds are internet transfer or RTGS. Problem with the former is my current bank does not allow more than $100k a day via internet banking, which further delays placing full funds into the new bank. So the best method this time is to get into the one branch in my state and make the RTGS payment and pay the fee.

The issue I have with banks I've used is they reluctantly give prior notice when settlement date is set. With my last switch, the bank settled when I was overseas, even though they agreed not to settle until I returned. Once I realised, I got online and made a few transfers over a three day period. But they reimbursed the interest incurred on this occasion which I was thankful for.

I've asked for settlement date notice from the new bank this time so I can ensure I am available to get into the branch. We'll see.

I understand that this is just how it is with banks. I'm not as concerned with small fees (I am getting cashback after all) but wonder if there is a better (more efficient) way. For example, I wonder if some banks can transfer the offset over for you at the same time with loan settlement? Especially if the loan and offset setup is the same between the two banks. With the new bank, I have had to setup the offset myself and is a completely separate process to the loan application with new ID checks, etc. I'm not sure if this is the usual way it is done or not.

Would be interested to hear from those who have switched and your experiences in getting funds transferred over.

Edit: Just an update for anyone interested. Although everyone at St George stated this could not be done (except one friendly staff member who tipped me off to the possibility), I was able to transfer $100k per day per account holder. Being a joint account, that was a total of $200k a day.

Cheers all for the help.

Financial Home Loan

Comments

  • jv on 10/02/2023 - 14:53
    +6

    my current bank does not allow more than $100k a day via internet banking

    My kids hate that too…

    I need to stagger their pocket money each week.

    • OldBugger on 10/02/2023 - 15:41

      I see, but do they charge you for interest they incurred on their tree house loans?

  • JIMB0 on 10/02/2023 - 15:03

    Do they pay you interest?

  • Donaldhump on 10/02/2023 - 15:37
    +1

    get a bank cheque walk from bank A and walk to bank B and deposit.

    risk you take trying to smash cash bonuses.

    • OldBugger on 10/02/2023 - 15:47
      +2

      Thanks I'll look into this option. RTGS is probably easier though.

  • SBOB on 10/02/2023 - 15:50
    +2

    move funds to 'high' interest savings account, transfer loan, move funds to new loan
    Fussing about for a week or twos worth of interest differential isn't worth the stress or hassle of hoping the outgoing and incoming banks dont mess it up themsevles.

    • OldBugger on 10/02/2023 - 15:57

      Fair comment. Will look into this one too. Cheers

  • onetwothreefour on 10/02/2023 - 17:27

    I'm going to be in a similar position to you in a couple of months.

    How does it work refinancing for cashback when you have that much in your offset account?

    Do the banks not care or do you not tell them? Surely they wouldn't be too keen on giving you money if they're not going to get any back from you?

    • OldBugger on 10/02/2023 - 18:59

      Ha, I thought this too about if they care or not. They don't. Well, the ones I've used. I'm open about wanting the cashback (and credit card freebies).

      I used to get stuck on their question, "How much is owing on your loan?" I'm thinking, I don't owe anything. But yeah, they just want to know about your loan balance. They treat the offset completely separately when working out assets, etc. Others may chime in with more experience here though.

      • onetwothreefour on 10/02/2023 - 19:56

        My problem will be that my loan size is now less than $250k which most cashback T&C's say you have to be over.

        • OldBugger on 10/02/2023 - 20:04

          Can you apply for $250k on new loan? It doesn't have to be the same as current balance.

          • onetwothreefour on 10/02/2023 - 21:52

            @OldBugger: Yes I can and put the extra into a redraw so it's like I didn't borrow more but I'm not sure if I want to borrow extra regardless.

          • JIMB0 on 10/02/2023 - 22:06

            @OldBugger: Yes you can do a cash out refinance if you meet lending criteria. The surplus funds are deposited into your transaction account. They will ask what you want the money for. Gambling and wild overseas holidays will see your loan declined. Renovations and a new car no problems.

    • poida on 13/02/2023 - 21:29

      we had offset the size of the home loan, we basically said the amount will be used for home renos and an investment property in the near future.

      no issues in getting the cashback, have done it 3 times with various banks. cheap free money back in the day.

      • OldBugger on 14/02/2023 - 15:16

        Out of interest, what do you have now? No more home loan?

  • belesci on 10/02/2023 - 18:18
    +1

    Mate was it even worth typing it up. How much interest you paying daily….

    • OldBugger on 10/02/2023 - 19:09

      About $50 day once new loan opens. Last churn was about $180 from memory. The post is just gathering thoughts from others and finding efficient methods I'm not aware of, not necessarily the cheapest.

  • El-Rhi on 10/02/2023 - 19:28
    +1

    You can just transfer the funds from the offset to the loan prior to settlement (so loan balance is $1) then on settlement the surplus funds get transferred to your offset account at the new bank

    • JIMB0 on 10/02/2023 - 22:03
      +1

      Good plan but you will loose the ability to claim interest as a tax deduction if you ever rent the property out.

  • poida on 13/02/2023 - 21:30

    Our last refinance was with stgeorge to citibank. As soon as loan was settled we moved in 100k increments daily. Not a big deal with scheduled online payments. Citibank actually sets up the offset accounts way before settlement date.

  • OldBugger on 07/03/2023 - 18:11

    Just an update for anyone interested. Although everyone at St George stated this could not be done (except one friendly staff member who tipped me off to the possibility), I was able to transfer $100k per day per account holder. Being a joint account, that was a total of $200k a day.

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