{"id":13899,"date":"2017-09-10T01:00:58","date_gmt":"2017-09-09T15:00:58","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=13899"},"modified":"2017-09-10T01:00:58","modified_gmt":"2017-09-09T15:00:58","slug":"offset-account-benefits-andrew-mirams","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/offset-account-benefits-andrew-mirams\/","title":{"rendered":"Offset account benefits &#8211; Andrew Mirams"},"content":{"rendered":"<p>Simon asked us to talk about the benefits of an offset account.\u00a0 What it is and how it is best used?\u00a0\u00a0\u00a0 We turned to <strong>Andrew Mirams<\/strong> who gives all the detail.<br \/>\n<strong>Transcript :<\/strong><br \/>\n<strong>Kevin:<\/strong>\u00a0 I want to answer a question that came in from Simon at Caulfield. Simon asks about an offset account. Could we please explain what it means? We mentioned it in the show on a few occasions. Joining me on the line to discuss that, Andrew Mirams from Intuitive Finance.<br \/>\nGood day, Andrew.<br \/>\n<strong>Andrew:<\/strong>\u00a0 Hi, Kevin. How are you?<br \/>\n<strong>Kevin:<\/strong>\u00a0 Good, mate. I shot that question to you from Simon. Just explain for him what an offset account is, mate.<br \/>\n<strong>Andrew:<\/strong>\u00a0 I think it\u2019s a good question because still, it appears that the offset accounts and do they really work are common questions that we get asked quite regularly.<br \/>\nThe first point is what is an offset account? Traditionally, it\u2019s now basically like your savings account. A lot of people will have a second savings account or something like that, but it can just be your normal day-to-day savings account. What we do is we take them, we attach it to your loan, and then whatever the balance is sitting in that account actually fully offsets against the interest you pay on your loan.<br \/>\nLet\u2019s just say, for example, you have a $500,000 home loan and you have a balance of $10,000, it\u2019s effectively saying you only pay interest on the $490,000, so it saves you the difference between what you have in savings and what you have in the loan.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Mate, are there any questions that someone should ask themselves before they step into one of these, an offset account?<br \/>\n<strong>Andrew:<\/strong>\u00a0 Yes. I think wherever you\u2019re going into a normal package or something, if you can get an offset, we\u2019re big advocates of them because we see the ease of management, so not having to shuffle money around. All your money goes into the account and effectively starts working for you to assist you to reduce your loan interest. So, I think they are great things.<br \/>\nBut at the same time, you have to watch. The banks sometimes will charge you a fee for having it. Sometimes the rate might be slightly higher, so you have to make sure that you have to be able to justify the benefits.<br \/>\nIf you never have more than $100 in your account, it\u2019s probably not worth having an offset account. But if you tend to sit on thousands of dollars from month to month, or you\u2019re a good saver and you\u2019re regularly adding more money, absolutely, I think an offset account is a great facility to have to help you reduce your interest on your loan.<br \/>\n<strong>Kevin:<\/strong>\u00a0 In the event where an account may vary quite a lot \u2013 lots of ins and lots of outs \u2013 is there any advantage in having an offset account in that situation, Andrew?<br \/>\n<strong>Andrew:<\/strong>\u00a0 It tends to just depend on the average balance. Our high income earners, a lot of them get paid on a monthly basis, so they get a big lump sum once a month and then they slowly work their way through their living expenses to the end of the month, and it can diminish. That\u2019s very normal.<br \/>\nWhile you have all of that money in your account, it\u2019s like paying off your loan, just living out of your loan. That\u2019s kind of what it is. If you have a reasonable fund going there, I think it can definitely save you interest.<br \/>\nTo give you an example, Kevin, just say you had a $500,000 home loan at an interest rate of 4% and you just had $10,000 sitting there as an average balance offsetting against it. Over the life of the loan, that\u2019ll save you just shy of $23,000. I know I\u2019d rather have that in my pocket than in the bank.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Absolutely yes. There\u2019s a good demonstration. We\u2019ve had a number of questions about this, and I think you said it at the outset too, that offset accounts is one thing that you\u2019re asked quite regularly about.<br \/>\nWe\u2019re also asked about loan redraws. We\u2019re out of time right now, but what I would like to do is do a special interview with you on that. We might actually do that as a video, Andrew, and then we can post that up on your website, on your channel on Real Estate Talk as well.<br \/>\n<strong>Andrew:<\/strong>\u00a0 Absolutely. I think that\u2019s a great idea because there are some key differentials that you need to understand.<br \/>\n<strong>Kevin:<\/strong>\u00a0 Watch out for that. It\u2019ll be on Andrew\u2019s channel. We\u2019ll put it up there for you this Sunday, actually, the difference between offset accounts and loan redraws. That\u2019s on the Intuitive Finance channel on Real Estate Talk. Just have a look for it. That\u2019s what we\u2019ll call it: \u201cWhat\u2019s the Difference Between Offset Accounts and Loan Redraws?\u201d You can just put that into the query box.<br \/>\nAndrew, thanks for your time, mate, and we\u2019ll catch you again soon.<br \/>\n<strong>Andrew:<\/strong>\u00a0 My pleasure, Kevin. Have a great day.<br \/>\n&nbsp;<br \/>\n&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Simon asked us to talk about the benefits of an offset account.\u00a0 What it is and how it is best used?\u00a0\u00a0\u00a0 We turned to Andrew Mirams who gives all the detail. Transcript : Kevin:\u00a0 I want to answer a question that came in from Simon&#8230;<\/p>\n","protected":false},"author":176692471,"featured_media":11766,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2,33,34,10,11,13,36,25],"tags":[101],"class_list":["post-13899","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-andrew-mirams","category-case-studies-topic","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Offset account benefits - Andrew Mirams - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/offset-account-benefits-andrew-mirams\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Offset account benefits - Andrew Mirams - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"Simon asked us to talk about the benefits of an offset account.\u00a0 What it is and how it is best used?\u00a0\u00a0\u00a0 We turned to Andrew Mirams who gives all the detail. 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