No real benefit, just changes the account you need to ensure has enough funds available. I had a similar setup previously, just used the redraw as the savings since you get a better interest rate.
I don’t know about other banks, but the CBA now lets you nominate multiple accounts as offsets, plus having a mortgage redraw account. That way, it doesn’t matter where your money is kept, it all counts towards reducing your interest. Makes a difference.
American here, I’m jealous of this element of your mortgage system
No, noting about our system is to be admired.
You have socalised mortgages through Fannie and Freddie and can budget knowing rates will be locked for decades because that’s how they operate your banks have to do the same.
We have shitty WAY overpriced housing, some of the most expensive in the world in a small country (gazillons of acres but not many people) at the bottom of the planet ffs, we have poorly built housing stock with poor building codes (thin walls and slap giant HVACS on the side with no though to effiency) and cost a fortune to run
We only have privates mortgages with nearly all floating rates, we have a mostly protected cartel of lenders, the so called Big 4.
All our mortgages are full recourse, banks can persue you in perpetuity if u get I to trouble.
And 100s of other terrible things…
What’s your savings account and why do you use one if you have an offset?
If you have funds going into an account other than your offset it makes sense for them to be paying your mortgage so the offset stays as high as possible. Even better, get everything paid into your offset and then pay mortgage and everything else from there.
Ah ok. I am first home buyer so had to idea we can do this. I’ll close all my accounts today and just use offset for everything.
Some banks don’t allow yountondo everything from an offset so might not want to close the others yet. But the Odra is to keep as much as possible in there. It basically free tax efficient money by doing so.
How is it taxfree? Like I am not getting any interest like HISA ?
Yes. Instead of being taxed on interest you earn, youre avoiding interest you would be charged.
