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  1. #31
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    Default Re: Home loan payments - sorry, but do you think this is right??

    Tbh I have found putting money in doesn't make the interest come down too much. We took out 65k credit out of the account and the repayment was an extra 100$ so having money in credit helps over the long run in finishing the mortgage but in regard to repayments its still basically the same

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    Default Home loan payments - sorry, but do you think this is right??

    Yep. We pay extra to lower the payments quicker but it doesn't mean we can skip/reduce a payment.

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    Default Home loan payments - sorry, but do you think this is right??

    Quote Originally Posted by Rose&Aurelia View Post
    Yep. We pay extra to lower the payments quicker but it doesn't mean we can skip/reduce a payment.
    We do too. Awesome explanation too, I've been trying to get my head around it!

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    All i know is that I CAN use whats in my redraw to skip/reduce a monthly/fortnightly payment PROVIDING i have enough to cover that amount, i have been told this a few times over several years when i have enquired about it in the past - but never have done it before. However with all the conflicting information i have been given this week, i honestly do not know if this is even correct anymore.
    We do pay extra to our fortnightly repayments, which will reduce our loan by 6 years, so this is not my issue.
    In a way i feel like it's daylight robbery - you are told you can do it, so you do it .... then find out that some how interest will eat it all up and your monthly repayment will not be made (when thats been the whole purpose of adding the extra).

    I'm soooooo confused and i am no longer going to keep giving myself headaches over it..
    I will keep an eye on it, and if interest eats up my repayment, i will have to dig into every penny of my savings to pay January repayment - which is what i've tried to avoid.

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    Default Home loan payments - sorry, but do you think this is right??

    Do you have an offset account? If you do, in future keep your extra repayment cash there so that you know exactly how you're using it. It still reduces the interest you pay by the same amount as making extra repayments, just as long as you know it's not there to spend.

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    Default Home loan payments - sorry, but do you think this is right??

    Quote Originally Posted by GM01 View Post
    Do you have an offset account? If you do, in future keep your extra repayment cash there so that you know exactly how you're using it. It still reduces the interest you pay by the same amount as making extra repayments, just as long as you know it's not there to spend.
    ^^ this!

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    Quote Originally Posted by GM01 View Post
    Do you have an offset account? If you do, in future keep your extra repayment cash there so that you know exactly how you're using it. It still reduces the interest you pay by the same amount as making extra repayments, just as long as you know it's not there to spend.
    I do have a savings account and i do notice that when i do put money into that account (which is rare because our saving account is with a different bank), i notice that our Net position on the home loan is adjusted by the amount we have in our savings account, but our Debit (redraw) position, is not affected at all by the amount we have in the savings account and it does'nt affect the scheduled balance (amount owing on the home loan).... IYKWIM?

    Is the offset account just my normal savings account what i described above?. I'm terribly sorry if i'm asking silly questions as i'm not that knowledgeable when it comes to home loans, but all i know is what needs to be paid - what we DO pay - and when it has to be paid.

  9. #38
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    So after doing a little research, i think this is classed as an offset account as i think it's linked to the home loan some how (not 100%).

    I was thinking of doing this, but i didn't want to be tempted to use it if times were getting a little tough, and the money was used for something else.

    I really wish i had done this now.

  10. #39
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    I would suggest for hte future, try and get an offset account instead of the redraw facility.

    This is basically a seperate cheque/savings account that you can use as you like, but any balance in the account is deducted from your home loan balance when calculating interest.

    Any extra repayments, you pay into this account so they come off your home loan interest calc, but you are free to spend this money when you need. This means you put extra in here, and use that extra to pay the monthly repayment when you need it/want to skip a payment.

    This way the bank does not control your money - you do, but you get the benefit of your extra funds reducing your mortgage.

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    Default Home loan payments - sorry, but do you think this is right??

    The offset account is any type of account with the same bank as you home loan, which they have linked to the home loan for the purpose of offsetting - ours is just our everyday transaction account but it can be a savings account.

    Say you have a $100,000 mortgage and $5,000 in an account that's linked/nominated as your offset, you will only get charged interest on $95,000 of your mortgage without having to actually place that $5,000 in there. It would not affect your mortgage balance or redraw capability, it just reduces the amount of Interest that is applied to your mortgage account at the end of the month. The benefit of this arrangement is the $5,000 is there at the ready for you without having to worry about redraw, and particularly useful if your surplus is below the minimum redraw amount as it is in your case. If you needed to use this extra for a repayment then you would need to physically transfer a repayment amount in to the mortgage as the bank doesn't automatically touch your offset account in any circumstance.

    Hope that makes sense :-)


 

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