How does Offset and Redraw affect your Mortgage Repayments?

[@MortgageBrokerAustralia]

Get the 5 Best things I've found in the property and finance world every week - for free. hubs.ly/H0qHChB0

[@dsinghr]

Redraw vs offset.. which is better option ?

[@julianne24601]

This is the only video I've found that actually explains how it affects repayments. Thankyou!

[@MortgageBrokerAustralia]

I'm really glad to hear that you found our video helpful in understanding how repayments work! Our aim is to make the home buying process as straightforward as possible, so it's great to hear that we're hitting the mark for you. If you have any more questions or need further clarification on any topic, feel free to ask. We're here to help make your home buying journey as smooth as possible. Cheers, Hunter Galloway Team

[@tariqmalik8497]

Did you add $250 twice? You took away from the interest but also added it to principal?

[@jacobmaljers3166]

Awesome practice for maximising savings and precious time! Can’t wait to start our journey, thanks guys!

[@MortgageBrokerAustralia]

You got this! Thanks for watching Jacob :)

[@ejtpun1066]

You are the best.

[@MortgageBrokerAustralia]

Thanks EJT!

[@mariamalrubaey8408]

but you just talked about offset in p/l and l/o loan! what about redraw in p/i and i/o?

[@MortgageBrokerAustralia]

Thanks for watching Mariam, please check out: kzbin.info/www/bejne/jGXNoGqVbMd7aKM

[@tamatetera6702]

Thanks bro!!!

[@MortgageBrokerAustralia]

Any time

[@mohammad3034]

Awesome video 👍

[@MortgageBrokerAustralia]

Thanks for the visit

[@ejtpun1066]

What happens to my Redraw money if in less than 12 months, I refinance to different bank?

[@MortgageBrokerAustralia]

Thanks Ej, so long as you refinance the limit and not the balance. The redraw will remain.

[@KJxxoo]

What happens if you need to use funds in your redraw? Is your loan term still going to end up shorter because there was a period of time paying less interest and more principal?

[@KJxxoo]

Sorry if this sounds like a dumb question. I grew up in a very poor household where home ownership wasn’t even thought of so I’m trying to educate myself as an adult the best I can.

[@MortgageBrokerAustralia]

Certainly! If you need to use funds from your redraw facility, it can impact your loan term and how quickly you pay off your mortgage. When you make extra payments into your mortgage, as you do with a redraw, you effectively reduce the principal amount you owe. This means you'll pay less interest over time. So, if you've been using your redraw to make extra payments, your loan term could end up shorter because you've been chipping away at the principal balance. However, keep in mind that accessing funds from the redraw might extend the loan term again, depending on how much you withdraw. It's a bit like a seesaw - extra payments shorten the term, while withdrawals can lengthen it. It's a good idea to talk to your mortgage broker or lender to understand how specific redraw transactions will affect your loan term and financial goals. They can provide personalized advice based on your situation.

[@houmanmilani]

So you saying Interest only loan is not a preferred loan.?

[@MortgageBrokerAustralia]

Whether an interest-only loan is preferable or not depends on your specific financial situation and goals. Interest-only loans typically require you to pay just the interest for a set period, usually 1-5 years. During this time, you're not reducing the principal balance, which means your loan amount remains the same. This can result in lower monthly repayments compared to principal and interest loans, freeing up cash for other investments or expenses. However, once the interest-only period ends, you'll have to start paying both principal and interest, which usually results in higher repayments. Principal and interest loans, on the other hand, are generally seen as a more straightforward path to actually owning your home outright, as you're consistently chipping away at the principal. Your choice between the two would depend on various factors such as your cash flow needs, investment strategy, and your comfort with having a loan balance that doesn't decrease for a period of time. So, there's no one-size-fits-all answer to whether an interest-only loan is "preferred" or not-it's all about what suits your individual circumstances.

[@houmanmilani]

@@MortgageBrokerAustralia Thanks, that makes things a lot easier to understand. I now know what works for me best.

[@JebusJones]

So what are the pros and cons of offset vs redraw?

[@MortgageBrokerAustralia]

They both achieve the same thing. That is to save interest. They just work differently. So if you're an investor you'll want the offset (best to get advice from your accountant to see if it makes financial sense) and if it's your home you live in, you can use either. Thanks for watching!