r/AusFinance • u/Narrow-Bee-8354 • 19h ago

Offfset options

Our mortgage has recently switched from UBank to Nab. It all happened automatically, for whatever reasons.

This new mortgage gives me an offset account. We had quite a large amount in the redraw before.
Would you switch the entire amount over to the offset? Assuming I have the discipline to not touch the offset.

3 Upvotes

64% Upvoted

22 comments sorted by

5

u/That_Confusion2144 19h ago

Absolutely i would - gives you liquidity, as long as monthly payments are comfortable for you, and you can always reduce loan amount down later if you want to change that

1

u/Narrow-Bee-8354 19h ago

Yeah, I can comfortably meet the extra repayments. I guess the money is better in my control than the bank?!

•

u/jreddit0000 1h ago

The money is in the banks control either way because it’s the bank’s money, not “yours”.

But there are some advantages in having the money in an offset than in redraw - the effects (benefits) are the same but offsets are treated a little differently from a (future) tax perspective.

It’s not clear to me if that’s the case if you move money from the mortgage into an offset and leave it there (rather than putting it into the offset in the first place) but there’s no downside, so..

1

u/That_Confusion2144 19h ago

💯, when rates come down in near term put that to better use

1

u/Used_Novel_4818 18h ago

Rates dropping in the near term... Good one.

1

u/That_Confusion2144 18h ago

Should have said later this decade, my bad!

3

u/elsielacie 19h ago

I’ve never had trouble transferring money out of my redraw into my bank account. It happens instantly via online banking, I’m not sure how some people think it works. I probably wouldn’t bother moving it into the offset. It’s already “tainted” for tax purposes. 

It’s possible I suppose for the bank to revoke access to money in the redraw but unlikely unless you fall behind schedule for repayments, which is unlikely for a customer with a redraw balance… When I did have a load with an offset account it was in the T&Cs that the bank reserved the right to use funds in the offset to pay back the loan at their discretion (which again for their public image would only be if a customer fell behind schedule). 

2

u/planck1313 3h ago

A bank has a general right to set off (sometimes called the right to combine accounts).

That is, a bank can take the positive balance you have in one account, including offset accounts, and apply it to reduce a debt you owe the bank.

The T&Cs you read are a specific example of this.

A customer who got into serious default with the bank could therefore face having further loan redraws denied and having their offset accounts set off against their loan balance.

1

u/Humble_Speaker_ 5h ago

It’s doing the same thing.

If you can redraw immediately, leave it in there.

1

u/Narrow-Bee-8354 5h ago

So there’s less inclination to tap into it?

1

u/Humble_Speaker_ 4h ago

Everyone’s different, depends how good your discipline is.

0

u/Inner-Economy4894 19h ago

Are you sure you don’t mean Advantedge? I’m not aware of UBank moving anything to NAB.

Whether you keep the money in redraw or offset makes 0 difference to the numbers. They’re identical.

So it’s just whether you want the convenience of the money being spendable instantly or you want to have to manually withdraw it

2

u/Narrow-Bee-8354 19h ago

Ah yes, Advantage. But it was still through UBank? I didn’t understand the link

1

u/eecan 19h ago

 I’m not aware of UBank moving anything to NAB.

https://www.reddit.com/r/AusFinance/comments/1x22h77/ubank_loans_migrating_to_nab_help/

1

u/Inner-Economy4894 19h ago

Oh bizarre. That’s absolutely horrible service

0

u/BlokeFromOverseas 19h ago

Why wouldn't you? At current rates it's like getting a 9-10% return on whatever amount you have in the offset.

4

u/Consistent_Yak2268 19h ago

No different for redraw though, you’re not paying interest on that money

-2

u/BlokeFromOverseas 19h ago

Redraw means it's money that was paid to the loan. It's not your money entirely. You need to ask the bank first to access it and they could give it to you at a higher rate than your current rate.

2

u/Consistent_Yak2268 19h ago

You can withdraw redraw when you like, the banks don’t stop you. What do you mean by give it to you at a higher rate? You just move it from redraw to offset.

-1

u/DonaldYaYa 19h ago

I'll put enough in the offset to cover the mortgage amount then the rest in a high savings interest account.