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  1. #1
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    Default Structure of Finances

    Evening lovelies,

    DH and I are exchanging on our first home Monday or Tuesday this week (WOO HOO!) and we have decided to change all our accounts to our home loan provider as our accounts will be fee-free.

    My question to you is, how do you structure your finances?

    We are thinking of having all our pay and family assistance paid onto the mortgage minus the fortnightly expenses.

    For the major bills, i.e rates/rego/insurances we will do a redraw (free) off the home loan as we will be in-front of our repayments.

    In this case we'd only have two accounts, the home loan and the every day account.

    How does everyone else do it?

    Thanks

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    Default Structure of Finances

    Yep, just like that. The more money you can throw into your offset account the better (so all income) as it reduces the interest you pay on your home loan - a different savings account will not earn you more interest that you will save doing it this way. Your bank should really set this up and guide you.

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    We have an offset account which is different to what you are mentioning and you can probably get one, depending on the bank.

    A mortgage offset account is a normal bank account that you can access from ATM's/etc & put money into, but any money in it is considered (for home loan interest purposes) to be paid off the loan. So, if you have a home loan of $200,000, but have $50,000 in the offset account you only pay interest on $150,000. But if you want some of that $50,000 it's easy to get and you can write cheques from it (if it's a cheque account too) and get that money from an ATM, etc, etc.

    The issue with home loan redraws is that it can get messy. We have the option of free redraws too and do put extra into our home loan as savings (eventhough we have an offset account as our main & only other account). The issue is that there is a minimum redraw of $2000 and every time we redraw we get a letter from the bank for both of us (joint loan) about the redraw & telling us our new minimum repayments, etc, etc. Basically, it's a cumbersome way of accessing cash and I wouldn't choose to put all your money into it. I'd try for a 100% offset account if possible first.

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    Default Structure of Finances

    Mim1 our redraw isn't like that at all, I can access it online, any amount. That would be annoying the way you describe it.

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    Thank you for the replies!!

    That does sound very fiddly I have to say.

    The good thing about this particular loan is that the redraw has a min of $500 and I can do it online which it will transfer it to the everyday acct. the loan is in dhs name only so would only receive 1 letter however it is still a waste of a letter.

    Would doing it this way affect your min repayments? As I understand it, it roughly stays the same (obviously interest rates will vary it) as any extra repayments goes off the principle?

    I could be completely wrong with that tho?

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    Default Structure of Finances

    I SHOULD do as PP and have a mortgage offset account - but I don't!

    I prefer to have separate accounts for my mortgage/bills/everyday/savings. It's just the way I've always done it and like being able to visualise exactly how much is in each account.

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    Default Structure of Finances

    Quote Originally Posted by Pesca77 View Post
    I SHOULD do as PP and have a mortgage offset account - but I don't!

    I prefer to have separate accounts for my mortgage/bills/everyday/savings. It's just the way I've always done it and like being able to visualise exactly how much is in each account.
    This is exactly what I have. I have a high interest saving account for my savings - really keeps motivated as I keep wanting the amount to get higher.

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    Default Structure of Finances

    Quote Originally Posted by CookingMonster View Post
    This is exactly what I have. I have a high interest saving account for my savings - really keeps motivated as I keep wanting the amount to get higher.
    But you pay tax on interest earned in a high interest saver, you save interest on your home loan with an offset account, which is more valuable (unless you have hundreds of thousands in a high interest saver but then you would be paying huge tax).

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    thanks so much for your replies everyone

    Gives us some food for thought!!


 

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