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 paulstepowski
Joined: 24 Jun 2007
Posts: 1
1.72 Dollars($)
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 Posted: Sun Jun 24, 2007 5:43 am Post subject: Offset Loans - Fortnightly vs. Monthly Repayments |
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Hi all,
I'm considering taking out a loan which has an offset feature. I was wondering for loans with an offset account, is it better to go for more frequent repayments (e.g. fortnightly rather than monthly) or does the offset account cancel out the benefit of more frequent repayments?
My friend opted for monthly repayments with his offset because he said it saved you money, but that doesn't make sense to me.
Thanks in advance,
Paul |
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ezmortgageloanz
Moderator
Joined: 06 Apr 2007
Posts: 124
Location: National
37.57 Dollars($)
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| Posted: Sun Jun 24, 2007 4:53 pm Post subject: |
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Welcome to the forum---given your chose of your words, I am going to hazard a guess that you are from the UK (I use to live there and fortnight isn't recognized as bi-weekly in the U.S.).
Paying your mortgage bi-weekly allows you to pay one extra payment a year and therefore trimming the shelf life of the loan by 6-8 years (26 payments = 13 monthly payments).
I wouldn't pay anything extra for a "fortnight" payment plan though---you do this on your own (by sending in extra "principal only" payments).
Hope this helps and good luck.
Regards,
Scott Miller
_________________
National FHA Mortgage Broker
www.BadCreditMortgageMakeover.com
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Paul
Guest
0.10 Dollars($)
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| Posted: Sun Jun 24, 2007 7:38 pm Post subject: |
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I'm from Australia. I understand for a standard loan that paying off fortnightly rather than monthyly gives you an extra monthly payment.
My question was, what impact does an offset have on this? Is it still best to go fortnightly? |
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ezmortgageloanz
Moderator
Joined: 06 Apr 2007
Posts: 124
Location: National
37.57 Dollars($)
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| Posted: Sun Jun 24, 2007 8:16 pm Post subject: |
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I'm sorry, but you will need to explain what you mean by the word "offset" as used "what impact does an offset have on this?".
Is this to mean monthly payment?
Regards,
Scott Miller
_________________
National FHA Mortgage Broker
www.BadCreditMortgageMakeover.com
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jenkin7
Joined: 04 Jun 2007
Posts: 939
140.80 Dollars($)
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| Posted: Mon Jun 25, 2007 12:12 am Post subject: |
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| Quote: | I'm considering taking out a loan which has an offset feature. I was wondering for loans with an offset account, is it better to go for more frequent repayments (e.g. fortnightly rather than monthly) or does the offset account cancel out the benefit of more frequent repayments?
My friend opted for monthly repayments with his offset because he said it saved you money, but that doesn't make sense to me. |
Hello Paul,
Basically, an offset account is an account that is connected to a loan account so that the earned interest is used to lessen the interest on the loan. You can go for additional repayments, even if it is a small one, regularly. This way, your loans would be repaid quickly.
For more information on Loan payoff using offset account, do read through the section regarding the topic. |
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Paul
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0.10 Dollars($)
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| Posted: Mon Jun 25, 2007 1:31 am Post subject: |
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| I know what an offset is. My question was more about what effect payment freqency has when combined with an offset feature. |
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jenkin7
Joined: 04 Jun 2007
Posts: 939
140.80 Dollars($)
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| Posted: Mon Jun 25, 2007 2:13 am Post subject: |
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Hello Paul,
I feel that there is no effect of the payment frequency when it is combined with an offset account. The only thing that takes place is that the loan period is reduced. |
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Rosetta
Guest
0.10 Dollars($)
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| Posted: Mon Jun 25, 2007 2:44 am Post subject: Regarding payment frequency |
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| Quote: | | I was wondering for loans with an offset account, is it better to go for more frequent repayments (e.g. fortnightly rather than monthly) or does the offset account cancel out the benefit of more frequent repayments? |
Hello Paul,
If you increase the frequency of your payments fortnightly rather than monthly, then you are able to clear off you loans faster than the years required for the actual payoff of your loan. You can also try weekly payments , to make the process even faster.  |
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