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No Fee Home Loan Offset Account @ Athena Home Loans

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No Fee Home Loan Offset Account @ Athena Home Loans
Go to Deal
Kas on 23/12/2021 - 22:09 athena.com.au (2433 clicks)
Last edited 05/01/2022 - 15:47 by 2 other users

We were waiting for a long time for Athena's offset account. Finally it happened and glad they offer $0 fee. I believe most of other banks charge $10 for this service, this is a deal.

SAVE THE FEES
Unlike other lenders, our offset has $0 ongoing fees, $0 annual fees, $0 transaction fees. With the same low rates!

___ Updated on 05/01/2022 __ My email to Athena…
Hi Team,

I am with Athena and recently got a message about an offset account. I just need to clarify below thing and hope you can help me with this,

From your website, it mentioned under FAQ:
Is my offset covered by the Financial Claims Scheme?
Athena is not a bank or ADI (Authorised Deposit-taking Institution) and therefore not eligible for the FCS. Rest assured, in the unlikely event that anything happens to Athena, your loan would be serviced by another provider on the same terms.

Does that mean in the worst case scenario, like Athena going bankrupt or liquidation ( I know it is a highly unlikely event),
1. Do we lose our money in offset account OR
2. Do you take those money to reduce our loan liabilities OR
3. Can we notify in advance and give the option to take our offset money from Athena account before an unlikely event happens?

I really like to know what is happening to our money in an offset account since Athena is not a bank or ADI?

Reply from Athena:
Hey XXX,

Thanks for reaching out. 👋
if we are not longer able maintain your loan, our step in provider Perpetual Limited,
1 of 2 scenarios will happen;

  1. Everything remains the same, including your redraw/offset balance.

  2. Everything remains the same, however your redraw/offset balance may be absorbed into the loan, thereby reducing the total loan amount accordingly (i.e. you had a loan of $250,000 and a redraw of $50,000 in addition – you could end up with a loan of $200,000). The offset funds will be absorbed into the loan. Since we aren't an ADI the offset will function similarly to a redraw in this case. 😊

Reach out to us if you have any questions.

Hope this helps to us…. cheers!

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closed Comments

  • mangobango on 23/12/2021 - 22:18
    +2

    Surprised there were no fees, hopefully they implement a debit card soon!

    • Tony-Abbott on 24/12/2021 - 00:11
      +4

      Then fees would go up. You keep adding pointless things, then costs go up unfortunately.

      • [Deactivated] on 24/12/2021 - 03:20
        +1

        Generally they make money on debit/credit cards. But the overhead admin costs of handling them might be harder to absorb for a smaller institution. Once there's a certain volume of customers using them they're cashflow positive, but maybe not worth the investment above things like instant payments out.

        • Russ on 24/12/2021 - 11:07

          But the overhead admin costs of handling them

          There's that, but there's something else too. Debit and credit cards often have disputed payments, which could lead to negative reviews by customers. Athena showcase their Trustpilot page on the Athena home page, they don't want negative reviews. So by not providing debit/credit cards, they avoid that negativity.

    • Russ on 24/12/2021 - 01:32

      hopefully they implement a debit card soon!

      Can you explain why? Instead of a debit card, I use a fee-free credit card (from a different bank to my home-loan provider), and it can be set to automatically extract the monthly payment from my offset account if I wish. How is a debit card better?

      • [Deactivated] on 24/12/2021 - 03:17
        +2

        Debit cards aren't necessarily better but I do have to use one occasionally due to credit card surcharges that are higher than debit card surcharges. I do the same with the credit card, but would still need at least instant payments out to somewhere with a debit card for those occasions.

        • Russ on 24/12/2021 - 10:55

          Thanks, that make sense. Fortunately very few of the places I shop have surcharges, I think only Aldi, and it's a negligible amount for me - about 10 cents a week.

          • Tleyx on 24/12/2021 - 12:24
            +1

            @Russ: Plenty of fee free debit cards available for that rare circumstance. Even if you leave $50 in it is only a dollar lost of interest

            • Russ on 24/12/2021 - 15:46

              @Tleyx: True, but at about $5 a year for the surcharge, I don't think it's worth my time to regularly top up the debit card.

              For people who pay more surcharges than I do, I can see it would be worthwhile.

            • [Deactivated] on 24/12/2021 - 21:09

              @Tleyx: It's mostly larger purchases from budget retailers that have 2-3% credit card surcharges, could easily be $50 surcharge buying a PC. Also certain travel places / airlines etc. A few % on $50 wouldn't be a big deal anyway, it's mostly when it's a few % on a much larger amount. Like I said, if you can instantly transfer out, not a big deal since most of these are planned. Also my credit card has some pretty horrific international transaction fees but ING/Ubank etc have no international fees on their debit cards if you meet their conditions. Essentially having a debit card as well saves me several hundred dollars over just my credit card.

          • Lucille Bluth on 25/01/2022 - 22:53

            @Russ: Can avoid the surcharge by inserting your card rather than tapping it.

            • Russ on 26/01/2022 - 12:08

              @Lucille Bluth: That doesn't work, I've been inserting the card lately as tap has stopped working reliably for my card. When I insert the card, it even brings up a notice about the surcharge, which I have to press the green button to agree to.

              If it works for you, you must be choosing EFTPOS instead of a credit transaction. My card isn't connected to a bank account, so no EFTPOS options are available.

    • ely on 25/12/2021 - 18:48

      Seems like a downside? Just get a credit card and pay it off every month, depending on the interest rate, your monthly spend, and the annual credit card fee it may well turn out to be cheaper than a debit card on the offset anyway.

  • PeppaCat on 23/12/2021 - 22:19

    Finally, they have offset…but the rate is not that good…

    • illz on 23/12/2021 - 23:33
      +6

      1.99% Comparison rate on Variable seems pretty good.

      • aussie-bargainz on 23/12/2021 - 23:44
        +9

        It is 1.99% for 60% LVR , 2.09% for 60-70% LVR, 2.19% for 70-80% LVR. OO P&I.

        • ely on 25/12/2021 - 18:49

          Those are all pretty decent, especially given that you'd be somewhat crazy not to fix most of your balance ATM anyway. Currently fixed on 1.9% + variable at 2.49% (but almost all of the variable is currently offset).

      • Shwayne on 23/12/2021 - 23:48

        1.99% if your deposit is 40%.

  • Tyrx on 23/12/2021 - 22:40
    +15

    No BPay, osko, payid or even scheduled payments… You're better of just going down the tictoc route for online only lenders.

    • serpserpserp on 24/12/2021 - 07:13
      -1

      Why do you need that stuff in a home loan?

      • bozbargain on 24/12/2021 - 09:35
        +3

        Tyrx is taking about the offset account, which will become your day to day ‘savings’ account. Pretty annoying if you can’t schedule a payment or give someone your phone number as your PayID to receive payment for a Gumtree transaction?

    • eddie eagle on 24/12/2021 - 16:39
      +1

      This, I have had 2 tictoc loans for nearly 6 months. Fantastic features and rates. Owner Occupier P&I 1.89 & Investment IO 2.65. The offset is $10 a month but great features, future payment scheduling, etc. Debit card (not that I use that yet)

    • TimeAndMoney on 24/12/2021 - 17:43
      +1

      Also Tic Toc has ADI for offset too, i.e. a "real" offset with Adelaide Bank, although it is $10/month extra for the offset.

  • pennypacker on 23/12/2021 - 22:50
    +5

    You've left out the bit about interest rates. How does Athena compare?

  • joshx on 23/12/2021 - 23:21
    -2

    ANZ also offer $0 offset, or at least they did 6 months ago.

    • Lucille Bluth on 23/12/2021 - 23:51
      +5

      $10 monthly account fee applies, but this is waived if you're on an ANZ Breakfree package which is $395 annually. So not free.

        • illumination on 24/12/2021 - 04:28
          +11

          Why don't you add more info to your comment? This comment reveals nothing more than your initial comment…

        • Lucille Bluth on 24/12/2021 - 09:20
          +4

          So are you paying for the Breakfree package or not? And if you aren't, then you are missing out on the interest rate discount which negates the monthly $10 offset fee waiver.

          ours was free, as of 6 months ago.

          $10 fee applies unless you pay $395 annually for the Breakfree Package

          Source: ANZ website and partner works at ANZ

  • itsTricky83 on 23/12/2021 - 23:29
    +7

    I've been with Athena for a few years now. They've been awesome for me.
    I like how their Comparison Rate is quite low.
    They've always passed on rate drops pretty much immediately.
    Pretty much no hidden bullcrap with their loans.

    • juki on 23/12/2021 - 23:54
      +1

      how does it work paperwork wise when you switch to them?

      • Tony-Abbott on 24/12/2021 - 00:10
        +1

        95% of the paperwork is online.

        • itsTricky83 on 24/12/2021 - 10:07
          +2

          I'd almost go as far as to say 99% of paperwork is done online.
          Compared to the struggles various friends signing on with OTHER mortgages, having had endless visits to banks and in person meetup to sign this-that-and-the-other; my dealings with Athena were seemless!
          The only holdup I had was getting my previous mortgage provider to provide the release to Athena.. and that's no fault of Athena!

          • kipps on 24/12/2021 - 11:52
            +2

            @itsTricky83: This was my experience too. I would love to have stayed with Athena but they couldn’t do split loans and didn’t have offset accounts at the time. A great lender.

            • bargainsteve on 25/12/2021 - 16:52

              @kipps:

              but they couldn’t do split loans

              Do they do split loans now then? And by that do you mean fixed/variable kind of split or two borrowers split liability?

              • kipps on 25/12/2021 - 20:41

                @bargainsteve: So far as I’m aware they still don’t split. I wanted it for debt recycling.

  • EnALup on 23/12/2021 - 23:41
    +6

    From FAQs:
    - Is my offset covered by the Financial Claims Scheme?
    Athena is not a bank or ADI (Authorised Deposit-taking Institution) and therefore not eligible for the FCS. Rest assured, in the unlikely event that anything happens to Athena, your loan would be serviced by another provider on the same terms.

    • Kenb0 on 24/12/2021 - 01:10
      +3

      question….if a non-ADI administers the offset account, is it a "real" offset? Or is it "essentially a redraw facility labelled as an offset account"? If it is just a fancy redraw facility labelled as an offset account, how does the ATO treat it, as a redraw or an offset?

      https://www.canstar.com.au/home-loans/six-things-redraw-offs…

      From their FAQS:
      Can I access tax benefits through Athena’s offset?
      Yes, we’ve built our offset to comply with tax requirements. But tax advice is not our thing, so speak to an expert for tax advice!

      That's convenient…"Yes it is X, but because we're not an expert, don't trust what we say." They could essentially say anything and hide it behind that disclaimer.

      • [Deactivated] on 24/12/2021 - 03:03

        Previously it wasn't an offset, now it is.

        I don't imagine they want to give out tax advice, but I can't see how this change makes it different from a tax perspective than any other offset, nor how that's related to them being an ADI or not.

        As far as I understand the requirements for tax is simply that it's a separate account (eg, loan balance is not reduced).

        Disclaimers are frustrating but just about every company engages in major ass covering to the point you don't get useful advice from them.

        • PleasureMachine on 24/12/2021 - 09:40
          +1

          Athena are still offering a redraw product. I'm not sure of the technicalities of non-ADI lender or that sort of detail but I'm just hear to clarify the diff between an offset vs redraw. As for the life of me couldn't understand why other lenders were offering both but an offset had more fees, but kept getting told it was all the same sort of product…..
          I'll start with the disclaimer that this is just for general understanding. Seek advice from a tax professional.

          Anyways my basic understanding between the two:

          • Redraw - effectively any excess funds in your account from additional payments that are withdrawn are effectively "redrawn" from the bank/lender which increases your total taxable income. Especially if used for investment purposes such as purchasing shares or another property. I don't know the technical tax terms here. This is better if just using it for personal expenses or for upgrades/renos to your primary residence.

          • Offset - you are keeping the funds separate in your "personal" account so if you "reborrow" the funds you are using your own money to fund investments, not the bank/lender's. I'm led to believe if you are planning to use your excess money for future investments then offsets are the better product.

          How this translates at tax time, I've got blind deer about it so maybe an accountant or someone with deeper understanding can elaborate.

          • aedalat on 24/12/2021 - 17:02
            +2

            @PleasureMachine: I always think of it this way:

            • Redraw:
              any money that goes in is the money you are paying toward the loan, it is now the bank's money. Every time you are getting the money out of the redraw, technically you are trusting the bank allowing you to take out 'their' money.

            • Offset:
              This is your transactional account, the bank would offset the equal amount of the loan and you are only paying the interest on the non-offset part of the loan. This is your money and you can do whatever you like with it.

            Based on this, redraw has different tax properties than the offset money.

            • rektrading on 24/12/2021 - 18:18

              @aedalat: The banks technically own the deposits while the customers own IOU. They're the ones that can do whatever they want with the deposits.

              ADI was introduced to mitigate the risk for customers' IOU becoming worthless but it only covers up to $250,000 per person and ADI.

          • [Deactivated] on 24/12/2021 - 21:15
            +2

            @PleasureMachine: The tax implications only exist if it is, or will ever be, a loan for an investment property / purposes. There's no difference if it's for an owner occupied property that you are absolutely CERTAIN will never become an investment in the future.

            Essentially this is because the ATO regards any increase in the loan balance (eg a redraw) as a separate loan, so they look at the purpose of the redraw to determine tax deductibility. So if you have money in an offset against an investment property, you can take money out of that offset to use personally and your interest against the loan remains tax deductible, but that won't be the case if you redraw.

            Basically the difference exists simply because of how the ATO regards them to be different. Hence why they typically get away with charging more fees for essentially the same thing, for some people it could save them thousands in tax down the line. You can't escape the tax implications of putting extra money into the loan by refinancing etc.

            If you want to use the extra money for a future investment it doesn't really matter, because you want a new / split loan for that investment, (you could redraw to use on an investment just fine if both the initial loan and future purchase are investments, but mixing deductibility in the one loan is extremely messy so you would want a split loan if it was for your PPOR and investments).

            Redrawing doesn't increase your 'income'.

            Your understanding is very very wrong, almost opposite.

            TLDR; redraws (increases to the loan balance) are regarded as separate loans, when you're mixing purposes (owner occupied loan vs redraw for investment or investment loan vs redraw for personal usage) you have tax implications. When both are for personal uses vs both are for investment uses, it doesn't matter that much, though separate investments should really be seperate loans lest you dispose of one.

      • gimmeabreak on 24/12/2021 - 09:28

        Kenbo, I want to give you more than +1. You are on to it.

        Where is Athena’s tax ruling from the ATO?

  • Flintz on 24/12/2021 - 00:00

    this is tempting, only downside is that they are not an ADI

    • Tony-Abbott on 24/12/2021 - 00:09
      -2

      So what? Many thousands of people are already with them.

      • Russ on 24/12/2021 - 01:43
        +4

        So what? Many thousands of people are already with them.

        Fannie Mae and Freddie Mac had a combined 28 million mortgages when they went toes-up, which was one of the factors which precipitated the GFC. And it (mostly) wasn't even their fault that they folded.

        Having a large number of customers is no guarantee of security.

    • Manny Calavera on 24/12/2021 - 00:28
      +1

      I thought the schtick here was that you owe them money.

      • Russ on 24/12/2021 - 02:05
        +5

        But if they fold and are not an ADI, the amount in your offset account may be paid to the bank's creditors, and your loan gets passed on to another lender. You can lose the entire balance of your offset account.

        • JohnHowardsEyebrows on 24/12/2021 - 02:24

          I heard the opposite is true, ie the offset is just a sub loan account, so if they go belly up, you may lose access to the funds as an offset, but you won't lose any money.

          Whereas ADI offsets bear no legal relation to the loan account, and you'd be reliant on the limited bank guarantee the same as other deposit holders.

          The main drawback of non-ADI offsets are the possible tax issues down the track.

          • [Deactivated] on 24/12/2021 - 03:05

            @JohnHowardsEyebrows: I don't think it has anything to do with being an ADI or not, previously it wasn't a separate account, just an available balance, so it wasn't an offset. It just looks like they've linked the account from a security point of view to get around being an ADI, but it's the separate account that matters for tax.

            Their FAQ indicates they have separate statements and the loan balance is not reduced by the balance of the offset, and that's the real key. The reason redraws have tax implications is that the loan balance being increased as you redraw is regarded by the ATO as a new loan.

            But should they collapse and sell the loan, who really knows if in this case the offset could get absorbed into the loan, which seems like one of the two most realistic options (the other being that it's maintained). I think the least likely outcome given they've managed to get around ADI rules (by having it as a sub account) is that any money there is lost, but how unlikely is anyone's guess.

            • JohnHowardsEyebrows on 24/12/2021 - 10:35

              @[Deactivated]: Realistically, I doubt any court would rule against mortgage holders to force them to pay their mortgages while simultaneously shifting their offsets to other creditors.

              • Russ on 24/12/2021 - 11:30
                +3

                @JohnHowardsEyebrows: Nothing to do with courts.

                You are an unsecured creditor in terms of your offset account. In any liquidation secured creditors get paid out first, and then the unsecured creditors get any "crumbs" that are left - frequently nothing.

                See the recent collapse of STA Travel, for example. They were in the process of refunding my holiday payment to me, but it never made it to me, the secured creditors got it all.

                • kipps on 24/12/2021 - 17:49
                  +3

                  @Russ: This isn’t the complete picture. If you owe the mortgagee your loan and the mortgagee owes you on account of your offset then you can ordinarily set off the sum due to mortgagee under section 553C Corporations Act in the event of the mortgagee’s insolvency.

                  • Russ on 24/12/2021 - 19:19

                    @kipps: I can't say I understand the legalese of that section, but the wording "a person who wants to have a debt or claim admitted against the company" sounds like it invalidates what you are proposing.

                    The net money position between the two entities is that the home-owner owes money to the company, so is section 553C applicable in this case?

                    • kipps on 24/12/2021 - 21:01
                      +4

                      @Russ: Short answer - absolutely. This is all about mutual dealings of debits and credits with the insolvent company. It’s a protection afforded under the Act. It’s frequently ignored by non-legal comments dealing with the offset vs redraw question. You will however be inconvenienced by the lack of access to liquid funds while this is sorted out and will likely require a refinance to get sorted.

                • [Deactivated] on 24/12/2021 - 21:24
                  +2

                  @Russ: Given it's listed as a sub account I don't think you're an unsecured creditor.

    • tukanglistrik on 24/12/2021 - 02:28

      Bank of Sydney's also have $0 offset, and I believe they're an ADI.

  • rektrading on 24/12/2021 - 01:19
    -1

    The only good thing about legacy banks is bailouts.

    Lenders that can't get bailouts are high risk and should be avoided.

    • JohnHowardsEyebrows on 24/12/2021 - 02:25

      What's the worst that can happen? They fold and another bank buys your loan.

      • mctock on 24/12/2021 - 08:32
        +1

        I think the worst is that a non-ADI lender folds, and, while your loan will be taken by another lender, you lose whatever was in your offset.

        • serpserpserp on 24/12/2021 - 08:46

          A few other interesting things might happen depending on the liquidity in the market. But you could also be moved to a lender you don't prefer and terms and conditions of your loan might change and potentially pricing. Which could cost a bit of money to refi.

        • FXD on 18/01/2022 - 16:22

          You don't lose the money in your offset, it counts toward the debt you owe and reduces it.

  • rektrading on 24/12/2021 - 02:43

    What about offset accounts and redraw facilities?
    If you are using an offset account against your home loan to reduce interest repayments, you’re happily in the clear – offset accounts can only be offered by ADIs and are covered by the FCS.
    https://mozo.com.au/bank-accounts/articles/could-my-bank-or-…

  • JDKC on 24/12/2021 - 07:35
    +2

    I'd definitely run the offset structure by an accountant if the loan is (or may be in the future) used for investment purposes

  • t3chshopper on 24/12/2021 - 08:43
    +3

    I was an Athena customer for some time. Switched to Nano recently. Same low rate, with free 100% offset.

    However Nano have a debit card connected to offset account, Apple and Google Pay, multiple virtual sub-accounts ('vaults').

    Also, unlike Athena, Nano have a mobile app, and it's great.

    • butterboy on 24/12/2021 - 09:00
      +1

      Agreed, Nano have been excellent so far.
      The only thing missing for me so far is scheduled payments, but it's not a big deal.
      Most people I've met freak out when you tell them they log into your bank account though.

      • Meconium on 24/12/2021 - 13:47

        log into your bank account though

        What do you mean, why do they need to log in to your account?

        • t3chshopper on 24/12/2021 - 14:33

          They're probably referring to their automated approval system. Nano ask for read-only access to your account to check your income and spending history. I recall that Athena asked for the same thing when I applied for them earlier.

          • Elegant Giant on 24/12/2021 - 17:07
            +4

            @t3chshopper: I can agree with the freaking out. A CSV / PDF with complete history should suffice, no need to give them access to the account

    • mouski on 24/12/2021 - 09:14

      Agree as well! Just settled couple of weeks ago and has been a refreshingly easy experience.

    • benchman on 11/01/2022 - 12:30

      Sorry if this is a stupid question, but is Nano an ADI? If it crashes, will the offset be absorbed into the loan as per suggested above - which would occur with Athena, IF Athena crashed?

      • shake on 12/01/2022 - 01:45
        +1

        According to their FAQ, Nano is not an ADI:
        https://nano.com.au/faqs/

        They also state that their "offset sub account sits within the customer’s home loan account, meaning that it does not have a separate, stand-alone account number".

  • rektrading on 24/12/2021 - 10:01
    +3

    Offset accounts are covered by ADI while redraw facilities aren't.

    Lenders that provide offset accounts but say that they aren't covered by ADI are fake offset accounts.

    The fake offset accounts that could make your savings vanish

    By Nicole Pedersen-McKinnonApril 20, 2017 — 12.58pm
    https://www.smh.com.au/money/the-fake-offset-accounts-that-c…

    @PleasureMachine

    • [Deactivated] on 24/12/2021 - 21:28

      The headline (clickbait) really doesn't match the article.

      But rather than your offset funds being snaffled then your entire loan being on-sold to a different lender Sarah, they'd more likely just be sucked into your loan

      I think this is the real 'risk' of this sort of account. Extremely unlikely, but not impossible.

  • XabiFernando on 24/12/2021 - 11:57

    Good step, but still having out for loan splits. It's been "on their radar" for the best part of 2 years now.

    Are multiple offsets possible (like with Macquarie, amp, etc?) Or one offset only?

  • RogerWilco4 on 24/12/2021 - 14:34

    Can confirm that Athena are your best bet from the standpoint that they wont "rate jack" you after the loan settles, which is a common tactic used by almost every other lender. In the long run scenario you are much better off with Athena as you wont have to pay switching costs every few years due to interest rate jacking tactics used by the other banks. I learnt this lesson the hard way, by paying thousands in unnecessary switching fees and costs.

    Truly great to see a lender who keeps the customer's interests interests foremost. The dinosaur banks (Big 4) have a genuine challenger here.

    • t3chshopper on 24/12/2021 - 17:47

      Yeah, that's exactly why I switched to Athena, after my previous lender did exactly that.

      I eventually switched to Nano though for reasons mentioned in another comment, but only after ensuring they had the same loyalty rate promise as Athena.

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