Savings - with a mortgage are you better off putting savings in the redraw account or in an ING account?

I've got some extra money that I'm going to use in about 6 months - I'm wondering whether it's better to put the money in the redraw account, knowing that I will be taking it out (there are no fees associated with this) or putting it in an internet savings account like ING. Currently the ING rate is 3.5%.Savings - with a mortgage are you better off putting savings in the redraw account or in an ING account?
You will be benefit more by paying the money into your mortgage and then redrawing when you need to.


Your mortgage has a much higher interest rate than any savings account, internet or otherwise. By putting the money onto your mortgage to redraw later, you are reducing the balance on your home loan and therefore, reducing the interest you are charged by your lender.


Interest paid by ING would be nowhere near what you are saving on your loan interest.


Additonally, any interest earned in a savings account, is taxable income. It would need to be included in your tax return each year and would increase tax payable to the ATO. However, because you don't earn interest on your mortgage redraw account, you are merely reducing interest paid on your loan, you will not incur any taxation liability.Savings - with a mortgage are you better off putting savings in the redraw account or in an ING account?
Hey Mandy, your better off putting it in ING Direct. When you open an account you will get a $25 Bonus. Email me at stevemalikk@hotmail.com and I'll send you a referral. In the email subject put ';Need ING Direct Referral';





Thanks





Steve
Whichever account pays higher interest is best.

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