What is a toggle offset loan?
Generally a mortgage loan is either fixed or variable. However the toggle offset loan allows you to get the benefits of both a fixed and variable loan. This article will explain the toggle offset loan and explain reasons to be careful when obtaining such a loan.
A toggle offset loan is a complex mortgage product. To understand the toggle offset, you must first understand the offset. The offset is a type of account that allows you to reduce the amount of interest you are paying on your mortgage loan by the amount in the account. A toggle offset loan allows you to divide your offset into two separate portions which move back and forth (“toggle”) between fixed or variable interest rates. If it is in your best financial interests to have a fixed rate at that time, it can be a fixed rate. If it is better for it to be a variable rate at that time, it can be a variable rate. This allows you to take advantage of market fluctuations much more easily than a total refinance.
It is important to realise that if you choose a toggle offset loan, you will not be able to take advantage of the true variable interest rate that may be provide consistent changes in interest.
A toggle offset loan is a complex mortgage product but if you can qualify for said product, it can provide you with the benefits of paying down your mortgage interest in a quick fashion.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s an exciting and very rewarding one. If you’re thinking of applying for a home loan, you can Apply Online today to get started!