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I've been looking into my finances lately (I am an armchair finance person).

And it looks to me, that my return on investment isn't going to be the same, if for example, I put $12000 in an offset for a year OR pay an extra $1000 a month, for 12 months off my loan.

ROI on paying extra to mortgage

Firstly I go here: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-can-i-repay-my-loan-sooner

I enter:

owing: 250,000 Repayment: 2,000 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 12yrs 11mnths, Interest Paid: 58,133

Then I think about the $12000 dollars. If I pay an extra 1000 a month over the next year 1000*12=12000:

I enter:

owing: 250,000, Repayment: 3,000 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 8 years, Interest Paid: 35,080

So I'm saving 58133 - 35080 = $23053 over 8 years, next I get a yearly return number 23053/8=2881.62.

Finally it looks to me like 2,881 is 24% of 12,000 Said in another way, my ROI for $12000 is 24%.

ROI on leaving cash in offset

Firstly, again, I tried to get a calculator to do the heavy lifting for me: https://www.ing.com.au/home-loans/calculators/offset.html

I enter:

Loan Amount = 250,000, Loan Period = 13 yrs, Interest Rate = 3.36%, Offset Account Balance = 12000

The calculator gives back:

Interest could save = $6,347.32

6,347/13=488.23. So it looks to me like 488.23 would be my yearly return on putting $12000 in an offset. Which is a yearly ROI of 4.06%

This leads me to believe paying of an account is much more beneficial than putting funds in an offset. Is this correct? Am I missing something?

I always believed using an offset account or paying of a loan faster would equate to "saving" the same amount of money in the end.

I've been looking into my finances lately (I am an armchair finance person).

And it looks to me, that my return on investment isn't going to be the same, if for example, I put $12000 in an offset for a year OR pay an extra $1000 a month, for 12 months off my loan.

ROI on paying extra to mortgage

Firstly I go here: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-can-i-repay-my-loan-sooner

I enter:

owing: 250,000 Repayment: 2,000 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 12yrs 11mnths, Interest Paid: 58,133

Then I think about the $12000 dollars. If I pay an extra 1000 a month over the next year 1000*12=12000:

I enter:

owing: 250,000, Repayment: 3,000 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 8 years, Interest Paid: 35,080

So I'm saving 58133 - 35080 = $23053 over 8 years, next I get a yearly return number 23053/8=2881.62.

Finally it looks to me like 2,881 is 24% of 12,000 Said in another way, my yearly ROI for $12000 is 24%.

ROI on leaving cash in offset

Firstly, again, I tried to get a calculator to do the heavy lifting for me: https://www.ing.com.au/home-loans/calculators/offset.html

I enter:

Loan Amount = 250,000, Loan Period = 13 yrs, Interest Rate = 3.36%, Offset Account Balance = 12000

The calculator gives back:

Interest could save = $6,347.32

Get a yearly return 6,347/13=488.23. So it looks to me like 488.23 would be my yearly return on putting $12000 in an offset. Which is a yearly ROI of 4.06%

This leads me to believe paying of an account is much more beneficial than putting funds in an offset. Is this correct? Am I missing something?

I always believed using an offset account or paying of a loan faster would equate to "saving" the same amount of money in the end.

I've been looking into my finances lately (I am an armchair finance person).

And it looks to me, that my return on investment isn't going to be the same, if for example, I put $6000 in an offset for a year OR pay an extra $500 a month, for 12 months off my loan.

ROI on paying extra to mortgage

Firstly I go here: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-can-i-repay-my-loan-sooner

I enter:

owing: 214,000 Repayment: 2,000 Monthly Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 10yrs 8mnths, Interest Paid: 40,716

Then I think about the $6000 dollars. If I pay an extra 500 a month over the next year 500*12=6000:

I enter:

owing: 214,000, Repayment: 2,500 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 8 years 2mnths, Interest Paid: 30,990

So I'm saving 40,716 - 30,990 = $9726 over 8.2 years, next I get a yearly return number 9726/8.2=1186(I know it's not an exact year, but close).

Finally it looks to me like 1186 is 19.76% of 9726 Said in another way, my ROI for $6000 is 19.76%.

ROI on leaving cash in offset

Firstly, again, I tried to get a calculator to do the heavy lifting for me: https://www.ing.com.au/home-loans/calculators/offset.html

I enter:

Loan Amount = 214000, Loan Period = 11 yrs, Interest Rate = 3.36%, Offset Account Balance = $6000

The calculator gives back:

Interest could save = $2,635.99

2,635/11=239.54. So it looks to me like 239.54 would be my yearly return on putting $6000 in an offset. Which is a yearly ROI of 3.9%

This leads me to believe paying of an account is much more beneficial than putting funds in an offset. Is this correct? Am I missing something?

I always believed using an offset account or paying of a loan faster would equate to "saving" the same amount of money in the end.

I've been looking into my finances lately (I am an armchair finance person).

And it looks to me, that my return on investment isn't going to be the same, if for example, I put $12000 in an offset for a year OR pay an extra $1000 a month, for 12 months off my loan.

ROI on paying extra to mortgage

Firstly I go here: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-can-i-repay-my-loan-sooner

I enter:

owing: 250,000 Repayment: 2,000 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 12yrs 11mnths, Interest Paid: 58,133

Then I think about the $12000 dollars. If I pay an extra 1000 a month over the next year 1000*12=12000:

I enter:

owing: 250,000, Repayment: 3,000 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 8 years, Interest Paid: 35,080

So I'm saving 58133 - 35080 = $23053 over 8 years, next I get a yearly return number 23053/8=2881.62.

Finally it looks to me like 2,881 is 24% of 12,000 Said in another way, my ROI for $12000 is 24%.

ROI on leaving cash in offset

Firstly, again, I tried to get a calculator to do the heavy lifting for me: https://www.ing.com.au/home-loans/calculators/offset.html

I enter:

Loan Amount = 250,000, Loan Period = 13 yrs, Interest Rate = 3.36%, Offset Account Balance = 12000

The calculator gives back:

Interest could save = $6,347.32

6,347/13=488.23. So it looks to me like 488.23 would be my yearly return on putting $12000 in an offset. Which is a yearly ROI of 4.06%

This leads me to believe paying of an account is much more beneficial than putting funds in an offset. Is this correct? Am I missing something?

I always believed using an offset account or paying of a loan faster would equate to "saving" the same amount of money in the end.

I've been looking into my finances lately (I am an armchair finance person).

And it looks to me, that my return on investment isn't going to be the same, if for example, I put $6000 in an offset for a year OR pay an extra $500 a month, for 12 months off my loan.

ROI on paying extra to mortgage

Firstly I go here: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-can-i-repay-my-loan-sooner

I enter:

owing: 214,000 Repayment: 2,000 Monthly Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 10yrs 8mnths, Interest Paid: 40,716

Then I think about the $6000 dollars. If I pay an extra 500 a month over the next year 500*12=6000:

I enter:

owing: 214,000, Repayment: 2,500 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 8 years 2mnths, Interest Paid: 30,990

So I'm saving 40,716 - 30,990 = $9726 over 8.2 years, next I get a yearly return number 9726/8.2=1186(I know it's not an exact year, but close).

Finally it looks to me like 1186 is 19.76% of 9726 Said in another way, my ROI for $6000 is 19.76%.

ROI on leaving cash in offset

Firstly, again, I tried to get a calculator to do the heavy lifting for me: https://www.ing.com.au/home-loans/calculators/offset.html

I enter:

Loan Amount = 214000, Loan Period = 11 yrs, Interest Rate = 3.36%, Offset Account Balance = $6000

Get back:

Interest could save = $2,635.99

2,635/11=239.54. So it looks to me like 239.54 would be my yearly return on putting $6000 in an offset. Which is a yearly ROI of 3.9%

This leads me to believe paying of an account is much more beneficial than putting funds in an offset. Is this correct? Am I missing something?

I always believed using an offset account or paying of a loan faster would equate to "saving" the same amount of money in the end.

I've been looking into my finances lately (I am an armchair finance person).

And it looks to me, that my return on investment isn't going to be the same, if for example, I put $6000 in an offset for a year OR pay an extra $500 a month, for 12 months off my loan.

ROI on paying extra to mortgage

Firstly I go here: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/mortgage-calculator#!how-can-i-repay-my-loan-sooner

I enter:

owing: 214,000 Repayment: 2,000 Monthly Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 10yrs 8mnths, Interest Paid: 40,716

Then I think about the $6000 dollars. If I pay an extra 500 a month over the next year 500*12=6000:

I enter:

owing: 214,000, Repayment: 2,500 Monthly, Interest Rate: %3.36

The calculator gives back:

Time Till Completion: 8 years 2mnths, Interest Paid: 30,990

So I'm saving 40,716 - 30,990 = $9726 over 8.2 years, next I get a yearly return number 9726/8.2=1186(I know it's not an exact year, but close).

Finally it looks to me like 1186 is 19.76% of 9726 Said in another way, my ROI for $6000 is 19.76%.

ROI on leaving cash in offset

Firstly, again, I tried to get a calculator to do the heavy lifting for me: https://www.ing.com.au/home-loans/calculators/offset.html

I enter:

Loan Amount = 214000, Loan Period = 11 yrs, Interest Rate = 3.36%, Offset Account Balance = $6000

The calculator gives back:

Interest could save = $2,635.99

2,635/11=239.54. So it looks to me like 239.54 would be my yearly return on putting $6000 in an offset. Which is a yearly ROI of 3.9%

This leads me to believe paying of an account is much more beneficial than putting funds in an offset. Is this correct? Am I missing something?

I always believed using an offset account or paying of a loan faster would equate to "saving" the same amount of money in the end.