The world of mortgages, home loans, interest rates and finance can be very confusing. With all of the sketchy tools and services available nowadays, it’s hard to trust anyone when it comes to a mortgage. According to Loans.com.au a mortgage offset is a valuable option that can save you money on your home loan.
To calculate the interest you pay on your mortgage, the total in your mortgage offset is subtracted from the balance of your home loan and the interest is charged on the reduced amount. This means that you pay less interest and more of your money goes toward paying off your home loan.
So, if you have a balance of $200,000 on your home loan and $20,000 in your offset account, interest is only charged on the reduced amount, which means 200K – 20K = $180,000.
When you’re looking in to a home offset, make sure to check that it offers 100% offset and that there are absolutely no fees. You should also ensure that your interest is calculated daily.
Your salary is also used for the offset account. Make sure that your salary goes directly towards the offset account and establish a discipline of leaving your salary there as long as possible. This helps you get the maximum amount reduced on your home loan.
There’s plenty more to see, read on in the infographic below.