What is an
Offset Account?

What is an Offset Account?

Never heard of an Offset Account before…not sure if it’s worth having one?

Don’t worry, we completely understand. There is a lot of overwhelming jargon and finance terminology thrown around when applying for a loan with the bank. Our job as your preferred Mortgage and Finance Broker is to better explain the specific features available to you when it is time to apply for a loan.

So, what is an Offset Account anyway?

  • An offset account is an everyday transaction account that is linked to your home loan.
  • The money you have sitting in your offset account, “offsets” your loan.
    • For example, say you have a home loan of $500k and $200k in your offset account; in this situation, you’ll only be charged interest on a loan balance of $300k ($500k – $200k).

Therefore, you save yourself money in interest paid on your loan by having savings in your offset account.

What are the benefits?

  • Reduce the interest you pay on your mortgage by “Offsetting” your savings against your loan balance.
  • Can use your Offset Account like an everyday transactional account.
  • Pay down your home loan sooner.

Before making the decision to open an Offset Account, it is best to weigh up what features of a loan are most important to you. Nevertheless, whether you are a spender or a saver, an offset account is a great incentive to save money, reduce the interest paid on your loan and essentially assist with paying down your loan sooner.

If this is a feature you are interested in while seeking finance, please reach out to our friendly Mortgage and Finance Brokers here at Financia to discuss further!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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