Are you looking to buy a property? Have you ever thought of what kind of home loan to take? Does your loan account suit your personal financial situation the best? Let’s see what benefits a mortgage offset account can offer you.
What Is A Mortgage Offset Account?
A mortgage offset account is a transaction account that can be linked to your home or investment loan. The credit balance of your transaction account is offset daily against your outstanding loan balance, reducing the interest payable on that loan.
Offset accounts enable you to make the most of your income and other funds to reduce the interest payable on your home loan, thereby reducing your loan term.
How can an offset account work for you?
Let’s do a case study:
A customer with a $150,000 home loan over 30 years would pay approximately $167,190 in interest.
If the customer had an offset account linked to the home loan for the entire loan term with a constant balance of $10,000 in it, s/he would pay the loan off in 26 years and 4 months and pay just approximately $127,553 in interest.
This represents a saving of three years and eight months and approximately $38,636.95 in interest.[Please note: These figures are based on a Standard Variable Rate of 7.36% p.a.]
What should you do next?
At Simple Easy Finance, we not only assist our clients with finding the right loan for their situation, but our post settlement service is second to none. Post settlement we help our clients and show them how to correctly set up their bank accounts and how to link them the right way with their loan accounts.
If you need any assistance with finding out which lender is offering the right loan for your situation, we are right here available to help you. We have access to all the major banks and many other leading lenders. Plan ahead for your dream home.
Director, Simple Easy Finance Pty Ltd
Property & Finance Strategist