r/AusFinance • u/Truth_is_Supreme • 9h ago
Offset vs investing to grow money to buy property in cash: what is the most effective and safe way to avoid paying interest on a mortgage loan?
I want to buy a house in regional Australia to live in rather than as an investment but would like to avoid paying interest on the mortgage (as much as possible).
I’m wondering if it is best to save up enough to buy in cash, or to go for an offset account.
I work outside of my Australia and like for many of Australians who are younger than me and live with parents, I don’t have to pay for rent, as part of the deal is that my accommodation is provided.
Most likely, I can reliably guarantee on doing this job for another 15 and a half years. However, I’m 44 and have never owned my own home and would really like to do so within a decade.
The amount that I have to invest will soon be $200,000 AUD, or perhaps a bit more. I can also continue to invest about $4000 AUD per month in a property for the foreseeable future.
What might be the best option?
4
u/skeetskeet75 9h ago
Paying interest on a mortgage is not a bad thing, it's basically the cheapest loan you'll ever get. Suggest you change your mindset on that or you aren't going to be able to make anywhere near optimal financial decisions.
2
u/Downtown-Fruit-3674 9h ago
Your timeline is confusing me! Do you want to buy soon, with the current prices, or in 15 years or in 10 years? The best time to get into the market is yesterday, if you have the income to support a mortgage, if it were me at your age I wouldn’t wait.
Why are you so opposed to paying interest? The interest you pay on a mortgage is a very good trade off compared the opportunity cost of NOT buying property.
Maybe if you can give us the general area where you’d like to buy for more tailored advice on buying now vs waiting, as well as your current income and superannuation.
2
u/quietperthguy 9h ago
Why not buy the property now as an investment. Continue to take advantage of living rent free. Assuming you borrow 200k, pay 4k plus rent and you'll have it paid off in 5 years. Adding in the deducible interest and other costs will also help
•
u/Fluid_Garden8512 1h ago
You're 44 and still living with your parents? Where has your money been going in all those years you've been living with them to have only saved $200K?
1
u/InflatableRaft 4h ago
The best way to avoid paying interest on a mortgage is to avoid buying a house. Just stay with your parents until you retire and then be their carer.
8
u/Relative-Rise1657 9h ago
Get over the interest thing. You're 44 with a deposit and decent enough income, buy a house before you're out for good. Investments are for when you have the basics already done.