The Benefits of a Mortgage Offset Account
For some homeowners, a mortgage offset account is far and away the best option when it comes to financing a home. If you’re in the fortunate position to have stable enough finances, you can benefit by paying off your loan faster with the same interest rate, total amount and regular payment amount.
What is an offset loan?
When you take on an offset loan, you open a savings account with your lender whilst paying off your mortgage. Once that occurs, the interest you would have received on the savings account instead goes towards the mortgage.
These kinds of loans are typically flexible, especially with Mortgage House. They can allow for overpayment, underpayment and other variables. Whilst not the primary advantage of opening an offset account, flexibility can be extremely advantageous for those with irregular incomes.
Should YOU consider an offset loan?
Here at Mortgage House, we think a mortgage offset account is Australia’s best kept secret! With massive saving benefits, convenience and the power to knock years off your home loan, the question really should be: Why wouldn’t you have a mortgage offset account?
The size of your mortgage or your level of income doesn’t matter – if you’ve got a mortgage, an offset account can help you. You can experience an immediate impact on your mortgage by simply having your salary paid directly into the offset account. Because interest is calculated daily you’ll always save on interest, even if you start to use funds from your offset account.
The ability to access your money when you need it most is another reason to set up an offset account. Placing money into an offset account means you still enjoy the same benefits as if you were paying down the loan, but if you need the funds down the track for a renovation or much needed holiday, the money is available to use.
An offset account can potentially lead to a higher amount of future savings than a standard savings account, since what you save in interest on your mortgage is likely to be a higher amount than what you would have saved otherwise. In fact, maintaining a standard bank account while you have a mortgage is likely to cost you money when you consider the interest you pay on a home loan, compared with the interest you make from a savings account. Additionally, an offset account is beneficial because it’s equity you’re building up, so your savings are untaxed.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of opening an offset account, you can contact us for advice about the best options for you. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.