Did you know that the way your loans are structured can affect how much tax you pay and your ability to build wealth through the years? At Mortgage House, we offer tax-efficient borrowing solutions for our customers to help them optimise their mortgages to help them save money on taxes. We work with you to get a clear picture of your circumstances to help you find the right home loan and tax-efficient solution for you. Some options that may be right for you are as follows.
Borrowing the Maximum Amount and Using an Offset Account
One way to make your mortgage work for you is by borrowing the maximum amount for your loan and depositing what you don’t use in an offset account. Your lender cannot charge you interest on this account until you use the money. However, the interest will be tax-deductible. For example, if you borrow $500,000 to buy a $400,000 home and place the remaining $100,000 in an offset account, you can use it for renovations down the road, and any interest you pay will not be counted on your taxes.
Interest-Only Mortgages
When coupled with an offset account, an interest-only mortgage can reduce your tax burden. As in the solution outlined above, interest-only loans allow you to pay just the interest on your home loan for a set period. During this period, you can place any extra money you may have from not needing to pay the principal on your loan into your offset account. You can then use your offset account as usual while having tax-deductible interest payments on the account.
While those are the two most common tax-efficient borrowing solutions, we also offer other solutions that may fit your situation better. If you are interested in lowering your tax burden, give us a call to schedule an appointment with one of our expert lenders.
