...when I will have paid off my house loan. This week I've reached a milestone towards that goal: the outstanding amount is finally in the five-digit AU$ range.

Getting this debt down as quickly as I can is quite essential, you see, because banks in Oz are heavy duty bloodsuckers: the current variable interest rate for a mortgaged loan is 6.66%. Fixed-rate loans have a substantially higher rate.

The only saving grace of the banking system here is the availability of offset accounts: a zero-interest savings account, but every dollar in that account is offset against your outstanding loan debt. That way you pay loan interest only on the difference between the loan and the offset account balance.

The money in such an offset account is not bound in any way and you can put in and take out whenever you want/need. In Oz you have to pay interest on earnings from a savings account and that makes keeping your uncommitted money in an offset account even more beneficial: the possible interest you earn from a savings account is a lot less (after tax) than the interest you don't pay on your loan.

Naturally I'm using the offset account as much as I can and with that factored in, my actual debt is less than half of the stated figure.

And the housing market on the Gold Coast is quite ridiculous: units in my complex are currently selling for about two and a half times what I paid seven years ago; with a bit of luck I should come out ahead when I sell this place in some years.

[ published on Wed 21.04.2010 13:24 | filed in interests/au | ]
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© Alexander Zangerl