Redraw vs Offset Account [Avoid the $60,000 Offset Home Loan Stitch up]

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I like the marshmallow test you gave. My husband and I answered yes to all... so offset would suit us. We’ve learnt our lessons from being young and silly with money so the temptation to touch “savings” isn’t really an issue for us (unless we had a big financial hardship)

Thanks for another great video guys.

This is great info. Thank you.

Awesome video 👍

This video is exceptionally good at explaining the pros and cons of Offset. TBH, I don't see any cons of the Redraw except that the extra repayments are 'less' accessible than the Offset.

Have watched some of the other vids and they were good. Only lasted 12 seconds with this as I have a different stance. All stances are good, but I had done a lot of prior research. The annual fee has been far out weighed in my case

Good work Vecchio boys 👍🏻

One thing you can't forget about a redraw con, is that banks will amortise your redraw to ensure you pay off the loan within the contracted loan term, so if you're using redraw as a savings account it may not be the best option. You can have 20k one month in your redraw and next month your redraw has decreased to 18k

lol what? The major con to a redraw facility is if you want to rent out the property. For first home buyers, this is probable.. If you ever need to withdraw from your redraw, you'll only be able to claim the interest as a tax deduction on the remainder of the loan. Example: Say you have a 300k loan and 100k extra cash. With the extra cash sitting in an offset, the interest is calculated on 200k. If you withdraw that 100k for a non-investment purpose (to buy a car for example), you can still claim interest on the whole 300k on your tax if you’re renting the house out. Comparatively, if you take that 100k out of your redraw facility, you’ll only ever be able to claim interest on the 200k, even if you add the 100k back at a later date. When you initially add to your redraw, you in theory have ‘paid back part of the loan’. You can withdraw back the 100k from redraw, but this is like requesting to the bank that ‘I again want more loan’ and the bank may refuse or allow you to access a lesser amount. If it's a 'forever home ' and your goal is to simply pay off the loan, a redraw may be worth it. but for first home buyers who may rent the house out in the future, a redraw isn't good advice.

Is that $395 annual fee is an addition to the loan maintenance/service fee which is the same amount?

Is a redraw the same as revolving credit facility ? I’m so unsure which approach I should do when it comes to refix time. I’ve saved up extra money to dump on it as a lump sum and thought I’d increase my repayments. Why not just increase repayments on a fixed lower interest loan instead of having the high interest revolving credit ? I assume it’s the flexibility

Do you have any one in New Zealand who you know who I can get advice for my home loan please

I have a redraw mortgage and currently am paying my full time wage into it , and living off a part time 2second income this is lowing my principle dramatically . my question is should I be making extra repayments also or just continue to leave my repayments at current bank fig in my case around 500 per m and put all my savings into the mortgage redraw to accumulate great informative videos , learning heaps

I have offset account and I don't pay any annual fee

I don't know what an offset account is so this is confusing

redraw sucks as you can never claim it as a tax deduction should that property become an IP, guess depends on interest rate on offer. i think it cant be too hard to find a bank with a cheap int rate and offset

Outdated. Do you have an up to date video?

Offset is your money, the redraw is the banks very simple.

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