The Property Trio (formerly The Property Planner, Buyer and Professor)

#48: Offset accounts - God's gift to mortgage strategy


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This week we resume normal transmission and return to our education based Podcast, and take a break from our market and economic commentary and observations in our Covid-19 series. In this episode David Johnston, Cate Bakos and Peter Koulizos take you through: •Optimising tax deductions, how utislising your offset account will help you to save tens of thousands in future tax deductions over your lifetime. •How offset accounts can help you to hold property you would have otherwise needed to sell. This alone may add $1,000,000 to your bottom line in retirement. •Calling all upgraders, how you can put your best foot forward and maximise your ability to keep your current home as an investment when you upgrade. •Why offset accounts and your mortgage strategy are fundamental to your risk management. The government and banks targeted mortgage pauses and repayment reductions during this crisis to help the economy manage through difficult times. Counter intuitively, as we have said for a long time, a lower forced payment allows you to build up more savings via your offsets without costing extra interest, allowing you to build up savings buffers and have more surplus monthly cash flow. Great to see the government and banks get on board with our strategy during a crisis! •Offset is not the same as redraw and misuse could not only cost you tax deductions, you might also get in trouble with ATO! There is a critical difference which many people do not fully understand. A misuse of your offset or redraw could lead you astray with the ATO and cause you to fail the 'purpose test'. •How offset accounts provide the platform for your Money Management System as lenders now offer multiple offset accounts linked to your loan keeping more dollars in your pocket through interest savings and better tracking of your spending. •Interest earning accounts v offset accounts and why an offset account has greater financial benefits to you. •Interest only v principal and interest, and how your repayment strategy can provide you with choice and flexibility whilst optimising your tax deductions, manage risk by improving your cash savings buffer, enhance your ability to keep and accumulate property. Counter intuitively, sometimes paying less is more in the long run - if you are using offset accounts of course. •And of course, our 'gold nuggets'!
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The Property Trio (formerly The Property Planner, Buyer and Professor)By Cate Bakos, David Johnston and Mike Mortlock

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