Australian Money Forum

[bellaleggos]

Hi - I have a savings account with Bankwest that pays 6% for deposits made up tp $250 a month, my daughter has a childrens saving account that pays 7% for the same deposit. Should I save the maximum I can in these accounts a month, or pay the extra towards my mortgage at a rate of 5.68%. I'm currently paying an extra $2600 a month (all my salary) as extra payments to my mortgage but am not sure how long I will continue to do this as redundancy is on the cards.

[bawatkins]

Ideally you would have an offset account with your mortgage and put all your surplus funds in there. If you can't do that then put the surplus into the savings account instead of the mortgage, then when redundancy does come and you don't have an income for a period of time you can still pay the mortgage out of the savings account.

[arizio]

I would pay as much as you can on your home loan (As long as it is not an investment property). Make sure your loan has redraw!
With your savings account you are just paying more income tax - therefore you are probably losing about half of the $250p/m to government.