Offset Account Home Loans
An offset account home loan generally has a savings account in which the balance of the savings account directly offsets against the balance of the home loan. For example if you have a home loan of $100,000 and you have a balance of $10,000 in your savings/offset account, the interest charged on the home loan would be the balance of $90,000 ($100,000 Home loan minus $10,000 in the savings/offset account). If you had $40,000 in the offset account, you would be charged interest on $60,000. Interest on home loans is generally calculated daily, so the interest charged on the home loan is the home loan itself ($100,000 in our example) minus the average daily balance of the offset account. This is a great way to save interest, on your home loan, as an offset account is generally a savings account, and can be used as your day to day transaction account, with a debit card, bpay etc.
A great way to save money.
With most banks, an offset account home loan can be packaged under a banks professional package, saving on fees and offering a discount interest rate on your home loan.
With most banks offset accounts only work against variable rate loans, although some banks or lenders do offer offset accounts against fixed rate home loans, but most are only a partial offset against the fixed rate home loan.
There may be an application fee.
There may be a monthly or annual fee on an offset account home loan.
If your loan is greater than 80% of the property value, you will pay a once off mortgage insurance fee.
There may be a monthly fee on the transactional offset account.
Home loan terms from 5 to 30 years (Depending on the bank or lenders credit policy)
Principle and interest repayments are available.
Interest only repayments may be available.
