Unlock the Power of Offset Accounts: How to Save Big on Your Mortgage with Go Mortgage
If you’re navigating the world of home loans, you’ve probably come across the term ‘offset account’. However, what exactly is an offset account, how does it work, why might it be a game-changer for your mortgage? At Go Mortgage, we’re here to break it all down and show you how you can take advantage of this powerful financial tool.
What is an Offset Account?
An offset account is a type of bank account linked to your mortgage. The balance in this account is ‘offset’ against the remaining loan balance when calculating the interest you owe. In essence, the more money you have in your offset account, the less interest you pay on your home loan.
For example:
If your mortgage balance is $400,000 and you have $50,000 in your offset account, interest is calculated on $350,000 instead of the full $400,000.
This feature can save you thousands of dollars over the life of your loan while also helping you pay it off faster.
How Offset Accounts Work
Offset accounts function much like everyday transaction accounts. You can deposit your salary, make withdrawals, and pay bills from the account. However, any money sitting in the account works to reduce your mortgage interest.
Key Features of Offset Accounts
Full or Partial Offset:
Some accounts offer full offset (where 100% of your balance reduces your loan interest) while others provide partial offset.
Accessibility:
Your funds are fully accessible, giving you flexibility in managing your finances.
Integration with Your Loan:
The account is seamlessly tied to your home loan, making it easy to monitor your savings impact.
How to Use an Offset Account Effectively
To make the most of an offset account, consider these tips:
Maximise Your Balance:
Deposit your income and savings into the account to keep the balance as high as possible.
Budget Wisely:
Use the account for daily expenses but keep as much money in it as possible for maximum interest reduction.
Combine with Other Strategies:
Pair an offset account with a redraw facility or make extra loan repayments to supercharge your savings.
Benefits of an Offset Account
Interest Savings:
Reduce your interest payable and shorten your loan term.
Financial Flexibility:
Enjoy liquidity with access to your funds at any time.
Tax Efficiency:
Interest saved is not taxable, unlike interest earned on a savings account.
Frequently Asked Questions
Can I have multiple offset accounts?
Yes, some lenders allow multiple offset accounts linked to the same loan, which can help you manage your finances more effectively. Just ask Go Mortgage when you are setting up your loan and we can guide you through the process.
What is the difference between a redraw facility and an offset account?
While both help reduce interest, an offset account provides immediate access to your funds, whereas a redraw facility requires you to request funds you’ve repaid above your minimum repayment amount.
Do all lenders offer offset accounts?
No, not all lenders offer offset accounts or not all loan types have offset account attached. Basic loan products generally cannot have offset accounts attached. So, you need to think about this when structuring your loan. It’s important to compare options and find a lender that meets your needs.
How Go Mortgage Can Help
At Go Mortgage, we specialise in tailoring mortgage solutions to meet your needs. Here’s how we can assist:
Expert Advice: Our experienced brokers will explain the ins and outs of offset accounts and help you decide if they’re right for you.
Personalised Solutions: We’ll match you with lenders offering the best offset account options based on your financial goals.
Ongoing Support: From setup to management, we’re here to ensure you maximise your savings and stay on track.
Get Started Today
An offset account can be a simple yet powerful tool to save on your mortgage and achieve financial freedom sooner. Let Go Mortgage guide you through the process and unlock the full potential of your home loan. Contact us today to learn more about how we can help you make the most of your mortgage!
Related Resources
Home Loan Comparison Tool
https://www.gomc.com.au/calculators/compare-the-cost-of-two-different-home-loans/
Thinking of Refinancing
https://www.gomc.com.au/refinancing-is-your-mortgage-super-power/
Your First Home
https://www.gomc.com.au/our-services/your-first-home/