0:02 [Music] so the the landscape around commercial 0:09 or self-managed super funds is slightly different um and anybody who's ever spoken to A lender would understand um 0:17 that um regulatory requirements can be different um you know these some loans 0:23 like self managed super funds um are regulated a lot stricter much more many 0:29 more condition in terms of you know the types of property and how you manage it and things like that um so it it goes 0:37 without saying that the offset is always going to be very different um if available at all right so not every um 0:45 financial institution who offers commercial lending or self-managed super funds are actually going to allow you to 0:51 have an offset account welcome to the debt to Financial Freedom podcast I'm your host Victor Lagos and the founder 0:58 of Lagos Financial I've been in the finance and lending industry for 16 years and I've personally made Financial 1:04 mistakes and learned from them I started this podcast to share stories and lessons on my own journey and to share 1:11 insights that may help others on their journey and I interview people that I've connected with that share the same 1:18 values and Mission to help others create Financial Freedom welcome to the debt to Financial 1:23 Freedom podcast I am your host Victor Lagos I'm also the founder of Lagos 1:30 financial and the co-founder of propeller so uh today we' got an A 1:36 different type of guest my guest today is Shelley Medina and she is the growth 1:43 manager of Logos Financial welome Shell thanks Victor it's um I'm really 1:49 excited to be here on my first podcast for Lagos Financial yeah so I guess before we 1:55 start um going into uh today's I guess top we're going to really cover off a lot about offset 2:02 accounts because our clients always asking about offsets uh for the listeners are you able to share your 2:08 story I guess in your background in in financial services and what led you to work for for 2:13 Lagos yeah absolutely thank you so um my uh background is retail banking um I 2:21 spent almost 20 years um across a couple of different um major Banks um here in 2:28 Australia um I've had really diverse roles I started in um a call center and 2:35 um have worked through into branches um and also uh leading uh digital banking 2:42 teams um I've also worked with a professional membership Organization for 2:47 people in finances um and looking after the education um of people working at Banks 2:55 so um lots of time in retail banking lots of customer facing time as as well 3:00 um which is really my passion um what led me to losos uh was um 3:08 actually I I think I I I like telling people that the reason I actually joined Lagos was because I listened to your 3:15 first podcast um and you talked about uh your background and your parents and you 3:21 know it really resonated with me around um the importance of what people in 3:27 financial services do um and and and how important it is to make sure that you're 3:32 looking after your clients and doing the right thing by them so um really proud 3:38 and really happy to be working um with you and the team here at L Bal yeah 3:43 awesome yeah it's been really great to have you on board and I want to share um I guess a story from the beginning when 3:50 you and I caught up uh in Melbourne and you were telling me how you raised your 3:56 three kids uh and you taught them about money very early on and I think I always 4:02 wanted to share that with the audience because it's something that a lot of parents don't do and I can relate to 4:09 that my parents didn't teach me much about money uh and I had to figure out on my own so can you share a little bit 4:15 about that experience and I guess on the impact that's had to your kids in the later years of their life now yeah of 4:21 course yeah um you know my my my upbringing was very similar I'm really hard you know workingclass parents um 4:29 and and I think they tried to protect us from the realities of you know fi their financial situation so we never really 4:36 talked about money um and then when I started working in banking I realized 4:42 how little I knew about banking you know that I didn't really understand the 4:48 importance of savings the importance of managing your credit um so I really 4:54 wanted to instill that in my in in my three boys I wanted to teach them that 5:00 earning money came with responsibility and with discipline um and that there 5:06 was a a way that you could work really hard but enjoy the money that you had um 5:14 you know to to create some freedom for yourself and and some Financial 5:19 stability um so you know from the moment the boy started working we sat down and 5:25 I said this is awesome you're going to have this all this money that you can um do things with and buy things with um 5:33 but you have to have a savings plan you you have to put money aside um and so 5:38 each of the boys uh from the moment they've worked we've sat down and we've done a plan you know how much money are 5:43 you going to save how much money do you need obviously at 14 your overheads are very high uh so you have the ability to 5:52 save quite a lot um and I think it's wonderful you know and and so I think 5:58 that that's part of the reason why at 24 my first um my my oldest um bought his 6:04 first home um with a 20% deposit because he he understood the the discipline um 6:12 and the importance of having savings and thinking about your financial future yeah no it's really good that you 6:20 shared that and that's pretty impressive at 24 to to buy your first property at 20% and not need the bank of mom and dad 6:26 not need a guarantor loan not need and all these things that people get into in order to enter the property Market um 6:34 how long ago was that by the way so uh Liam did his purchase it was a a house 6:41 and land package couple of years you know to for the land to title and the house to build and all those sorts of 6:47 things so he actually um signed the contract at 22 um and moved in at the 6:55 beginning of this year okay so it wasn't that long ago which means there is hope right because 7:02 a lot of the stuff out there saying abely the current Generations can't afford to buy property in Australia anymore but it is possible with 7:08 discipline and and the right education and I guess that's why we've come together today is to really educate our 7:15 listeners and our our customers um because a lot of our customers ask questions about offset accounts and 7:22 whilst you know offset accounts are more applicable if you already have the loan 7:27 uh it's still important for people to understand of asss when they're leading up to saving for their for their first 7:33 property because once they bought that property and and all the savings are exhausted um they obviously want to pay 7:40 that loan back as fast as possible so um let's let's start let's let's learn a little bit about offset accounts um from 7:46 your own experience and then I'm happy to sort of jump in and share my own experiences as well yeah that would be 7:52 great um totally yeah look totally agree with you I think offset is something um is a term 7:58 that everybody's familiar with everybody's heard it um but I don't think people really understand um what 8:05 it is you know or how to use it uh and during my time in banking I saw a lot of 8:12 people who were missing out on the um benefits of H of using an oset because 8:18 they weren't quite sure what it was um so I suppose to start with the first 8:23 thing to know is that an offset account is basically a transaction account um it 8:29 it sits alongside your home loan um and it's uh used for you to park your 8:37 Surplus or your savings um to help you pay off your home loan sooner um and the 8:43 way it does that is um basically the money that you have in your offset is 8:49 deducted from the balance of your home loan so if you have a $300,000 home loan 8:55 and you have $50,000 in your offset you're only paying interest on um the 9:01 difference between the two um and what that does is that um it helps you pay off your homel soona 9:08 because over time the less interest you pay the more you pay off your principal because your repayments um are used in 9:16 that way um it's as I said it's a transaction account so you can have a a 9:23 fos or debit card linked to it you can use the money um freely so it's it's not 9:29 sitting ins inside the home loan um you have access to the cash that's in there 9:35 at any time um and quite often people set up their offset account separate to 9:41 their everyday transactions just as part of that um I guess discipline you know 9:48 of knowing that your offset money is in one account and that's working for you and then you have your expenses and 9:54 every day um set up in a separate account um 9:59 there are different types of offsets as well um and that will always depend on 10:04 the type of home loan you have um the policy of the bank that you're 10:10 with um so you know uh there are um what's called a 100% offset um or a 10:18 partial offset and the type of offset you're um eligible for will always 10:23 depend on the type of home loan you have um different as I said different banks have different policies is um around um 10:31 having an offset so it's really important um if you know that the offset 10:37 facility because that's what it's what's back to refer to it as a facility if the offset facility is available on your 10:43 home loan um that you understand what um 10:49 the terms and conditions of that offset are and and how to use it um because in 10:55 some instances you actually need to request for it to be activated it's not automatically activated you might need 11:01 to fill out a form um you might have to do it at the beginning of your home loan when you sign your loan exceptions 11:06 paperwork so just check um with your um bank or lender um to find out what type 11:13 of Offset you have and how you can activate it awesome you covered off a lot 11:20 actually on on how offsets work I'm sure I'm sure a lot of people um you know have experience offet but probably don't 11:27 use them properly so you you mentioned a little bit about how have if you have an offset account and you you know you you 11:34 have your main account where sorry where all your funds are for offset and you have a separate account for your transactions um can you explain that a 11:41 little bit more and how that could work if you had multiple offsets so some banks that offer multiple and some that 11:47 only let you have one offset how you would kind of I guess maximize the benefit on those two different 11:52 structures yeah absolutely um I I I think the first thing to make sure is if 11:58 you are going to have uh multiple offset accounts again always check how the 12:03 banks um will manage your or activate your offset some banks have a cap on how 12:08 many offset accounts you can have um some banks will actually have a cap on 12:13 how much money you can actually offset off your home loan so before you go 12:19 setting up multiple offset accounts just make sure that you've covered those things so how many offset accounts can 12:25 you have some banks will let you have up to 99 um offset accounts some banks will 12:30 only let you have five some banks will charge you a facility fee so again check 12:36 with check the way your home loan is set up to see whether you're charged for the facility or whether you're charged per 12:43 account um and then check how much you can offset some banks have unlimited 12:49 offset some banks have a maximum amount of you know5 or $50,000 so really 12:56 important to check that before you start opening up accounts and deciding how to set up your finances um the way I used to speak to 13:04 to clients when we when we spoke about offset was that what you really wanted 13:09 to do was differentiate or separate that Surplus or savings money that you had 13:17 into one offset um and there's a number of different reasons for doing that um 13:23 one is you don't want to mix up your savings and your everyday um uh money 13:29 right so you want to really get a clear idea of how much you've got in savings 13:35 and sure you might need to sort of dip into it every so often if something happens or you need to ex extra cash but 13:41 that's separate in the same way that you would have a savings account and you would saving for a holiday you want to 13:47 see that balance growing and you want to see that separated from your everyday expenses because you don't want to 13:53 overspend yeah the other reason it's a really good idea to have um your offset 13:58 fund or your offset Savings in a separate account is really around 14:03 security so remember your offset account is a transaction account if you have a card linked to that account and you have 14:12 $50,000 in that account and you know knock on W you were to lose that card 14:17 the last thing you want to do is for somebody to be able to access that money so keeping your offet uh savings or 14:24 Surplus in a separate account um works really well there's also the psychology of seeing that money and not really 14:31 wanting to dip into it too much um because you know like any sort of 14:37 savings goal um it's nice to see that balance increasing and remembering like I said the higher the balance in your 14:43 offset depending on how the bank has set it up um the less interest you pay on your H loan so definitely a good idea if 14:50 you're able to have multiple offset accounts maybe think about having one for every day one for bills and one for 14:58 you know the bulk of your savings that's usually um the sorts of suggestions or 15:03 ideas I used to um uh share with my uh customers when I was in 15:08 banking yeah and what about fees you touched on some will let you do sort of 15:13 um a facility fee and other would be per account um for obviously we deal with a 15:20 lot of banks and different uh financial institutions what are the main differences you see when it comes to 15:25 like professional package monthly fees and annual fees yeah y so usually when you get a home 15:33 loan under a package you get um a a a cluster of different services that you 15:40 don't pay for separately because you pay one Ann so for example you might pay 15:46 $395 a year and that 39 $395 a year means you don't pay any um monthly 15:54 service fees on your home loan you might not have to pay for an offset facility you might get free 16:00 redraw um you they might um you might not have to pay the annual fee on a credit card if it's part of the 16:07 package so generally you know uh basic banking is covered under um the 16:16 package um and you might get one free transaction account I know some banks 16:21 have um you know your everyday account where if you deposit $2,000 a month you 16:27 don't pay a monthly account keeping fee um you might under the package that 16:33 might not apply to you but it might it might only be for one account so if you have multiple accounts you may only get 16:39 the monthly pack the monthly account keeping fee waved on the first account 16:45 um so just keep that in mind if the loan isn't packaged so if it's say a basic home loan um you might not have the oet 16:52 facility even available on a basic home loan um or um you might have a stand Ed 16:59 uh loan where you have an offset facility but you have to pay a monthly offset fee plus a monthly account 17:07 keeping fee on the transaction account so really important to understand the 17:12 structure of the fee schedules when you're setting up your home loan um and whether it's a package or not pack un 17:19 packaged loan okay and and you mentioned something about basic not maybe not having uh offset so some people might 17:26 ask a question um what's the difference between offset and redraw and the benefits of I guess one 17:34 versus the other yep yeah absolutely so look I I think um as long as it's a 100% 17:43 offset the benefit of whether the money sits separately in an offset account or 17:49 whether it sits in your redraw or in your home loan um you're essentially 17:54 getting the same benefit I think the biggest difference is access ability right so if you have money in your 18:01 redraw in your home loan um you have to draw the money out of your home loan put 18:07 it into a transaction account um and then be able to use that money so that's 18:13 you know one difference whereas in an offset account the money is already sitting in your transaction 18:20 account I think the other difference as well is technically in the RAR and I 18:25 know you and I spoke about this a little bit um um the money actually is the 18:31 bank's money when it's in a redraw um and many years ago there was a financial 18:38 institution who decided that they were going to call in the money in the redraw 18:45 accounts for their customers and it caused a lot of issues because there were people who were putting all their 18:51 surplus funds into the redraws for you know just in case for emergencies even 18:57 for things like um Renovations of the house um so just keep 19:02 in mind in your transaction account off that's an offset account accessibility 19:08 that those funds are yours to do with as you as you will in the redraw it's a 19:13 little bit more limited around what you can do and how you can access those funds yeah yeah awesome I want to add to 19:20 that a little bit just because we deal a lot with investors and some people don't actually understand the implications of 19:27 using redraw when it it comes to investment as well so I just I'll just explain from my experience and also what 19:33 I what I what I help with our investors to learn about is that you're right when 19:38 you put the money into the loan it's the bank's money um but it also means that 19:44 your when you're redrawing it you're actually that's exactly what it means you're drawing it out again so you're 19:51 reborrowing the money that's why we're saying it's a Banks money so what that means is that if you have 19:58 intent to ever convert your home your principal place of residence into an 20:03 investment property you can't claim the interest up to the original loan limit 20:09 anymore once you put money into the loan and redrawn it out because there's now a 20:15 I guess a paper trail that says you've paid that money back and now you've gone and used it again so therefore you 20:23 technically only owe against that property what you paid it down to so hypoth ically if you owed 500,000 and 20:31 you accumulated 100,000 if you put that money into into offset your loan balance 20:38 will still be 500,000 you'll just be paying interest on 400 but if you put that 100,000 into the loan you'll have 20:45 100,000 available assuming the bank let you access it and your balance will be 20:51 400,000 so if you then converted to an investment and said I want to claim interest on 500,000 you can't anymore 20:58 you can only claim it against 400 so that's something to keep in mind for investors uh if you ever want to know 21:04 the benefits of offset and if it's worth while paying for um and uh I guess the 21:09 other one bit I wanted to ask you was about for investors specifically if they have an interest 21:16 only loan and they have an offset account how can that benefit them 21:22 especially when it comes to Growing their wealth and accessing Equity yeah look I I I think that that's 21:28 really interesting and I I think it's really interesting that the benefits of an offset account are different for um 21:35 your uh principal place of residence so your your home um versus an investment 21:42 um property right so it it's again checking to make sure 21:48 that you understand how the offset work is it works is uh works is really 21:53 important you know in terms of the difference of an interest only um loan 22:00 having those funds uh separate in an offset account um is still minimizing 22:05 the interest you're paying on on an investment interest only so you know uh 22:11 and I think this is something that um you could probably clarify as well I 22:16 know that investors quite often have equal balances so the the balance of the home loan is equal to the balance of the 22:23 offset account and therefore they're not paying any interest accessibility to those funds um is is there for for them 22:30 to use for um whatever purposes they want so um that's essentially you know the 22:39 sort of uh benefit that that an investor could get um keeping in mind I guess 22:46 things like um whether in terms of what your tax benefits are um and whether you 22:53 are I can't think of the word I can't think of the word um 22:59 and I I have an investment property and I can't think of the word of in Terms of paying less tax um negative gearing 23:08 negative gearing that's it thank you um yeah so keeping in mind around you know 23:15 that the interest you pay um on your home loan um can be used in if you're 23:21 negative gearing so just keep that in mind as well and talk to your accountant about how to best use your offset 23:27 account um if you have an investment property um I think you could probably add a lot more to that 23:34 Victor yeah I guess what I wanted to sort of touch on around interest only 23:40 with an offset versus principle and interest with an offset so if you have a 23:46 loan that's p& or principal and interest the expectation is that you make a 23:51 repayment every single month which essentially reduces the loan limit or what's called amortization it means that 23:59 the loan is being paid back over a period of time and if you borrow that 24:04 money as an equity release meaning that you're accessing cash but you're not 24:09 needing to use the funds straight away even if you put the funds um if the 24:15 loan was p&i and you put it in your offset account the bank will still 24:20 expect you to make principle and interest repayments even if the principle is technically zero if it was 24:27 in the loan right cuz say borrowed 100,000 and you put them 100,000 in offset technically you owe zero right 24:33 but by having principal and interest repayments the bank will expect you to make p and Ira payments on 100,000 so 24:40 and a lot of people get stuck with that saying why am I making payments to a balance that I don't even have well again this comes down to the fact that 24:46 you still owe 100K but the money is sitting in offset so that's your money but by having the loan as interest only 24:54 and the and it has to be a bank that uh has enough assist systems or or or good 24:59 systems that can identify the fact that it's a true interest only loan 100K 25:05 interest only 100K in offset therefore interest is zero therefore repayments 25:10 are zero so that that way you can have access to your money without having to come up with any repayments or affect 25:16 your cash flow uh because what can happen is I think people who constantly have to pay for something that they're 25:22 not using eventually say I'm just going to close this thing it's it's taking that money out of my account and I don't 25:28 even use the money but if it's not doing anything at least it's there as a as a buffer uh or it could be also prep 25:34 preparing you for the next investment purchase when you are ready give you time to do your your research and and 25:40 your structuring and your planning before you go and and you know spend the funds and at least you have access to it 25:46 in the in the offset account yeah yeah I I think that that's a really important point to make that um offset on a uh P 25:55 or principal and interest home loan won't change your repayment amounts right so yes you'll be paying more in 26:03 less interest excuse me on the on on the home loan but the bank has calculated 26:09 your repayments based on the fact that this loan will be paid off by 30 years 26:15 or 25 years so your repayment amounts are going to be the same offset doesn't 26:21 change that unless to your point you have an interest only loan and therefore 26:27 the interest on theot on the hot loan is going to fluctuate based on how much 26:33 you've got sitting in your offset yeah exactly it's explained really really well and um I guess one of 26:40 the other things we want to understand is around the benefits of having regular 26:45 contributions and I guess minimum um uh withdrawals can you explain that a 26:51 little bit and I guess how what imp implications or impacts that has to the borrower or the investor yeah yeah so 26:59 you know essentially um most people want to pay off their home loan suit right so 27:06 the the idea is that um the more you contribute towards this debt the faster 27:14 it will um be paid off the benefit of making those regular um deposits into um 27:22 an offset or having a high balance in the offset is that idea that the less 27:28 interest you pay the more you're actually able to to take off the debt or 27:34 the principal um o of the loan most loans um the banks calculate interest on 27:41 a daily um uh um cycle and then debit or 27:47 charge the interest to the home loan on What's called the payday of your home 27:52 loan the payday of your home loan um is generally set by based on the day that 27:58 you settled the loan so if you settled your loan on the 18th of the month then you know that's the payday some banks do 28:05 it on a calendar um a month but essentially the majority of banks will 28:11 calculate interest on a day byday basis so throughout the month if you're 28:18 increasing the balance of your offset or you're minimizing how much money you 28:24 take out of the offset at the end of that cycle the interest that you will pay on the home loan for that month is 28:31 always going to be less and that's essentially what you want you want to reduce the interest charges on your home 28:38 loan yeah you've explained that really well um when I used to work for a uh 28:44 non-bank lender in customer service um about 18 years ago this question would 28:50 come up a lot and the way I would explain that is um interest occurs daily 28:58 but it charges monthly so I guess what you know just to add on what I guess to elaborate what 29:05 that means is every single day interest is kind of like adding up but you just don't see it on your bank account or on 29:12 your loan or on your statement but it's in the background so it's accumulating or acre and then at the end of that 29:21 cycle it would charge to the loan and at the same time a repayment is required 29:26 whether it's interest early or p&i so to your point if you're making uh 29:31 additional contributions or extra repayments into the offset more 29:37 regularly that acrel instead of going up and up and up if you put money in it 29:42 drops down a little bit right and it goes down down then you put another one it drops a little bit further but if you wait till the end of the month it was 29:48 acre on a higher amount right that whole month so if you can bring it down it 29:55 will ACR a little bit less and then I guess what happens is because the interest is less that month but your 30:01 repayment is still the same if it's p&i you end up paying the loan not faster 30:06 because the repayments were originally calculated under the assumption that you were not making any extra payments or 30:12 any exactly right yeah exactly right yeah cool yeah and uh I want to ask a 30:20 little bit about um offset accounts for for commercial loans because a lot of our clients are commercial investors and 30:28 some of them would like offset from your experience and our clients what do you tell them when it comes to offset 30:33 accounts for uh commercial loans so the the landscape around 30:40 commercial or self-managed super funds is slightly different um and anybody 30:45 who's ever spoken to A lender would understand um that um regulatory 30:51 requirements can be different um you know these some loans are self-managed super funds um uh are regulated a lot 30:59 stricter much more many more conditions in terms of you know the types of property and how you manage it and 31:05 things like that um so it it goes without saying that the offset is always 31:11 going to be very different um if available at all right so not every um 31:17 financial institution who offers commercial lending or self-manage supervisor actually going to allow you 31:23 to have an offset account um I'm still in my learning phase in terms of the commercial and the 31:29 self-managed super funds and I know you and I have spoken a little bit about this um in terms of um the types of 31:37 offsets that you can have I believe um in the commercial lending space it's not 31:42 really an option um and then in the self-managed super funds uh it is but 31:48 it's also restricted around how you can use it um and the 31:54 flexibility um is a lot less in terms of those uh Financial institutions that can 31:59 offer it or do offer it um but I'd probably ask you to elaborate a little bit more on that um 32:06 Victor yeah so I guess for commercial the way I look at I look at it 32:12 personally is that you know it is commercial in nature right so commercial 32:17 meaning that you know everyone is in to make money and offset accounts um to my 32:23 knowledge were actually introduced uh by the financial planners Association back 32:28 in uh in the in the '90s and it was it was literally to to help the 32:34 consumers so Banks eventually conformed and they had to introduce them and allow 32:39 for them but if you think about it if you use an offset properly it doesn't benefit the bank at all actually because 32:47 you're paying the loan off faster and they're earning less interest and for mom and dads and consumers who are none 32:54 the wiser um you know they they they don't want to be taken advantage of so 32:59 that that's what these measures are in place to protect them and it's not really dis discussed in a fact of where 33:05 here to make money from you right it's more where he to help you to buy your your home and you know provide for your 33:11 family but once you jump into the commercial side it's very clear you're doing this to make money and so is the 33:17 bank so why would they be in a rush to offer things that mean they make less 33:22 money right uh and it also doesn't make much sense for you as a I guess as an 33:28 investor or or a business owner to be reducing the interest on your commercial 33:34 loans if they are tax deductible whilst you still have non-deductible debt such 33:41 as your owner occupied home so that should be the priority right so doesn't 33:46 mean you can't have them it's just most banks don't offer them um we do have a major bank that does but it is 33:52 restrictive to uh to full dock lending not leas do um and the lvr is capped at 33:59 65% that's a major bank and uh you know a couple of the non-banks offer them as well but they 34:06 are restrictive you need to um ask the question up front you can't expect that 34:11 it's just you can just add it whenever you want if you don't ask for it at the beginning you miss your chance uh and 34:16 then when it comes to smsf yeah most lenders don't offer it for smsf loans 34:23 but the ones that do it is it's called an e offset and an e offset off ET essentially means electronic offset so 34:30 it's not like you have a a card that you can access the money like a debit card 34:35 uh and you need to get permission each time you withdraw the funds because they can only go to One account and that is 34:40 your cash management account for the super fund so can be beneficial to have an offset for an smsf loan because 34:48 you're making regular contributions you might make extra contributions if that's what your accountant or financial advisor uh you know suggests however if 34:57 you don't have an offset and you put that directly into your smsf loan then 35:02 you may not be able to withdraw those funds anymore they're gone but you might need them because hypothetically you 35:09 might be out of a job for a period of time and you're not having any super contributions during that time um or you 35:15 want to buy another uh buy a property uh so buy another property and therefore having access to those extra funds can 35:23 be beneficial for you to to have an offset so when have a chat to Shel at 35:29 Logos Financial I'm sure she'll be able to explain that uh in a bit more detail 35:34 and uh yes that should cover that up yeah look I I think it's really 35:41 important to um particularly in um as an investor so um and depending on how 35:48 you've structured your loan to have a conversation with your accountant you 35:53 know as I said self-managed super funds are are highly regulated anyway um as is 35:59 any type of superannuation um fund really so how you manage it how you put 36:04 money into it how you how you whether you can take money out of it um is all 36:10 going to be dependent on those regulatory requirements so really important um and because offset is 36:16 technically Surplus cach you want to be making sure that you're using that s Surplus cach to benefit you and your 36:24 thinking about the structure I think the point that you made about um you know if you were ever out of a job and you 36:30 weren't contributing to your self-managed superf fund because of that 36:35 um um how would you how would the self-managed super fund make the repayments on the loan that's that's a 36:41 really important thing um to think about um again Surplus CL Sur Surplus cach 36:48 always think about what is the right strategy for you and how best to use it 36:54 y y agreed all right so I think we're getting close to wrapping up but I I do 36:59 want to just cover off a couple more things just at the end um here 37:05 is there's a I guess it's a bit of a hack and that is if you have a if you're 37:11 self-employed and you have a company and you don't need your ex your 37:16 your funds your basically retained profits or working capital you can actually put those funds into your 37:22 personal offset account and and as long as you return those funds into your 37:29 company account by the end of financial year so 30th of June and it's dollar for dollar so hypothetically took out 37:36 100,000 and then you put it back before that it's not considered a uh director's 37:43 loan and it's not considered a division 7A loan so it's like it never happened 37:48 so and I just got a calculator in front of me so if you owed 800,000 on your 37:55 loan on your home loan and the rate was say 6.24% just by having 38:01 $100,000 in your offset account if you were able to do that year on year you 38:06 would actually pay the loan off in 23 years instead of 30 years so you're 38:12 knocking off close to about about seven years so that's an interest saving of 38:17 just under $400,000 that you'll actually save just by doing this yeah people don't realize 38:24 uh what what impact it actually has of course being able to offset that much for that long it's not available for 38:31 it's not as easy for everyone but I mean even if you say it was 50,000 let's see 38:36 what that looks like you know that's that's nearly four years you're knocking off and you're still saving 38:42 $228,000 interest so as you can see uh guys an offset account can be very very 38:48 beneficial if you do it properly but there's a lot of intricacies around it and um when you get in touch with with 38:55 Shelley at Lagos Financial she'll be able to answer all your questions and go into a bit more detail and then of 39:01 course I'm always available to answer things that she's still learning um but I also wanted to uh sort of mention you 39:08 guys that we're actually going to be launching a new channel specifically for Lagos Financial so make sure you hit 39:15 subscribe uh the link is going to be in the show notes and in the description and we're going to be going into more 39:21 and more detail around these common questions that we get for for our clients yeah thanks Shell really 39:27 appreciate your time thank you so much Victor it was really good um to have this chat I 39:34 always love talking um you know home loans and banking so thank you so much 39:39 um and I look forward to our next chat yeah me too all right thanks guys thanks for listening bye cheers 39:48 [Music]