Is an offset account right for you?

Selecting the right home loan is very important. Considering your current situation and future plans will determine the home loan right for you.

 

Shopping around can be very time consuming and confusing.  Meeting with a Mortgage Broker can save you the hassle by guiding you to select the right loan product to suit your needs.

 

What’s an Offset Account?

An offset account is a transaction account that can be linked to your home or investment loan. The balance of this transaction account is then offset daily against your outstanding loan balance, reducing the amount of interest you pay on your loan.

 

How does it work?

If you have a 30 year mortgage at $400,000 with an interest rate of 5% and have an offset account with $10,000 in it from day one, you can save approximately $18,650.85 in interest and reduce your loan term by approximately 1 year and 3 months.

 

Having an offset account can help you make your money work harder by reducing the interest payable on your loan.

 

Positive

  • Arranging for your wages to be directly deposited into your offset account can immediately reduce the interest you pay on your loan, even if you spend that money over the course of your pay period
  • An offset account is essentially an everyday transaction account, so it’s very easy to deposit and withdraw funds


Negative

  • With an offset account you are not paid interest on the money you have saved in your account

 

While there are many benefits associated with an offset account, it is highly recommended to speak to a financial professional before making any final decisions,

 

At Mortgage Choice Bundall we have years of financial experience which can guide you and take the stress out of finding the right home loan that suits you best.

 

Call us on 07 5504 5569 for an obligation free appointment and save money today.

 

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Posted in: Home loans

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