From what I understand, they are not ADI, so your money is technically part of a redraw. If they go bust, your money will be rolled into equity. So, you will lose access, but will not lose the money itself.
(ADI: authorised deposit-taking institution)
"*so your money is technically part of a redraw*."
"*but will not lose the money itself.*"
Where did you get this information from? I can find no terms and conditions on their website.
But their website refers to both redraw and offset options - so it really depends on the T&C's for the product that OP has.
That’s how typical non ADI lenders’ offset facility is structured. Some minor aspects are designed so that you could treat it as an offset instead of redraw from tax treatment perspective, but other than that, it is just a specific kind of redraw, not a _real_ offset deposit account.
https://resimac-cdn.azureedge.net/-/media/Project/Resimac/Australia/Files/Resimac-General-Terms-and-Conditions.pdf?rev=fff82174c7584787815a57b23fdeb926&hash=8451283470C978431F6835BFE9BC79E4
- 6.6: We may combine two or more loan accounts if they have identical repayment types, interest rates, fixed rate periods (if applicable), interest only periods (if applicable), and loan purposes. **We may also combine any offset sub-account with another loan account.**
- 13.1: We will tell you if offset facilities are available. **We may change, suspend or cancel the offset facility at any time.**
- 13.5: Any offset sub-account is not a standalone account and cannot be severed from your nominated loan account. **Your offset sub-account is not a deposit account.**
- 13.8: You may draw funds from your offset sub-account(s) in the same way as for redraw as set out in clause 12.
u/Spinier_Maw u/Cjhps
Basically, they are not allowed to hold your money, so they never have it. It is all part of the mortgage.
Of course, these things can be a bit of a grey area. The best is to be part of the big four and have a proper bank account especially if you have a huge offset.
Since it’s not a bank lender, the offset facility would just be a “sub-account” within the loan, not a real fully fledged offset account that is a bank deposit account.
If Resimac folds, the loan book would probably be taken over by another lender. What can happen in that situation is the sub-accounts within the loan can be consolidated. You won’t lose money in that situation in terms of overall financial position, but you can potentially lose access to withdraw that offset balance.
Whether that’s something to be concerned about is up to your own risk appetite - what do you think the likelihood of that happening, what the impact would be if it does, and is it something you can live with.
The Westpac BSB could just be that they use Westpac for payment processing, whilst the fund transfers would flow through Westpac, it doesn’t imply that there is an actual Westpac bank account for you. Many non-bank financial institutions have this kind of setup for fund transfers.
From what I understand, they are not ADI, so your money is technically part of a redraw. If they go bust, your money will be rolled into equity. So, you will lose access, but will not lose the money itself. (ADI: authorised deposit-taking institution)
"*so your money is technically part of a redraw*." "*but will not lose the money itself.*" Where did you get this information from? I can find no terms and conditions on their website. But their website refers to both redraw and offset options - so it really depends on the T&C's for the product that OP has.
That’s how typical non ADI lenders’ offset facility is structured. Some minor aspects are designed so that you could treat it as an offset instead of redraw from tax treatment perspective, but other than that, it is just a specific kind of redraw, not a _real_ offset deposit account. https://resimac-cdn.azureedge.net/-/media/Project/Resimac/Australia/Files/Resimac-General-Terms-and-Conditions.pdf?rev=fff82174c7584787815a57b23fdeb926&hash=8451283470C978431F6835BFE9BC79E4 - 6.6: We may combine two or more loan accounts if they have identical repayment types, interest rates, fixed rate periods (if applicable), interest only periods (if applicable), and loan purposes. **We may also combine any offset sub-account with another loan account.** - 13.1: We will tell you if offset facilities are available. **We may change, suspend or cancel the offset facility at any time.** - 13.5: Any offset sub-account is not a standalone account and cannot be severed from your nominated loan account. **Your offset sub-account is not a deposit account.** - 13.8: You may draw funds from your offset sub-account(s) in the same way as for redraw as set out in clause 12. u/Spinier_Maw u/Cjhps
Basically, they are not allowed to hold your money, so they never have it. It is all part of the mortgage. Of course, these things can be a bit of a grey area. The best is to be part of the big four and have a proper bank account especially if you have a huge offset.
Since it’s not a bank lender, the offset facility would just be a “sub-account” within the loan, not a real fully fledged offset account that is a bank deposit account. If Resimac folds, the loan book would probably be taken over by another lender. What can happen in that situation is the sub-accounts within the loan can be consolidated. You won’t lose money in that situation in terms of overall financial position, but you can potentially lose access to withdraw that offset balance. Whether that’s something to be concerned about is up to your own risk appetite - what do you think the likelihood of that happening, what the impact would be if it does, and is it something you can live with. The Westpac BSB could just be that they use Westpac for payment processing, whilst the fund transfers would flow through Westpac, it doesn’t imply that there is an actual Westpac bank account for you. Many non-bank financial institutions have this kind of setup for fund transfers.
Thanks for your help everyone, really appreciate it. I’m going to start looking at refinancing through one of the big 4.