Save Thousands with an Offset Mortgage!

What is a Mortgage Offset?

Mortgage Offset is a home loan product which links the balances of your savings/transactional accounts with your home loan. This way the value of your savings will offset the equivalent value of the home loan, and you are only charged interest on the residual portion.

For example, say, you have a home loan of $1,000,000 and deposit savings of $50,000 linked together in a Mortgage Offset product. In this example, the bank will only charge you interest on the residual (non-offset) balance of $950,000. You will not be charged any interest on the $50,000 offset home loan. Similarly, the bank will not pay you any interest on your savings either.

Most people benefit from this product because the home loan interest rates are usually greater than the deposit savings rates.

Advantages and Disadvantages

The advantages of a Mortgage Offset product include:

• Save on interest

• Make lump sum savings to reduce the interest-bearing residual portion without incurring any penalties

• You can still access your savings if you need the cash

The disadvantages of a Mortgage Offset product include:

• Interest rates on Mortgage offset products are usually higher than special fixed rate loans

• Some banks charge a monthly fee

• Does not work well if you are not disciplined with savings

So talk to your financial adviser today and see how much you can save.

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RDAA Ltd strongly recommend that before a reader undertakes or implements any financial, investment, taxation or business decision flowing from information or content of this blog or anything else on our website, they procure professional advice from a suitably qualified adviser, on which they may rely on their specific opinion. Such advice should be comprehensive in character and appropriate to the individual's personal circumstances and financial affairs.