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Josh D.
Josh D.
Everton Park, QLD
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Hi

In Sep 2011 I purchased my first home for 240k. In Nov 2012 I moved out of the house and put it on the market for rent as I moved interstate. Since then it has regularly been rent for around $290 pw. I'm currently paying $1250/month principal and interest. I also put $500 a fortnight into a redraw account attached to the loan. The loan is down to 208k and my redraw balance is 38k.

Am I better having 38k in re draw or offset? I would like to purchase new house in near future.

6 years ago

Responses

Hi Josh,
You call it a redraw account attached to the loan? Typically an account “attached” is an Offset whereas extra money paid into the loan account can later be “re-drawn”.
For tax purposes, I believe that having the money in the separate Offset account identifies the money as yours rather than paying it off the house and then taking it back via redraw.
It doesn’t affect your ability to buy another property either way.
Check with your tax adviser to understand the effect on your deductible loan amount
Cheers
Scott

6 years ago

Hi Scott

Thanks for the response. I have seeker clarity that the 38k was sitting in redraw (in the home loan account) not attached offset account. Would that 38k work better for me in offset rather than redraw? The loan was restructured last week, is it too late to switch money back to offset rather than redraw?

Cheers
Josh

Comments

Hi Josh,
It probably is too late to change but it won’t matter.
It really depends on your situation and your cash flow. From a tax perspective an Offset is usually better so look at having an Offset when you set up your new loan for the next purchase
Cheers
Scott

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