Should you have an 'Off-set' account with your Mortgage?

An 'Off-set' account is a feature available from lenders and helps you reduce the interest expense of your loan.

How does an 'Off-set' work?

The 'Off-set' account is similar to a typical online savings account, the key difference is that instead of earning interest from the money in the account, it helps you save money by 'off-setting' the interest bearing principal amount of you home loan.

To have an 'Off-set' account you need to have a 'Variable' rate home loan or part of your home loan to be variable.

For example...

You have a home loan of $650,000

You have $25,000 in your 'Off-set' account

Interest on home loans in charged on the 'principal' amount outstanding, in this case it is $650,000.

If you have $25,000 in your 'Off-set' account though you are only charged interest on $625,000

Over a 30 year home loan if you kept $25,000 in your 'Off-set' account you would save $54,488 in interest!

Speak to Skyward Financial to help find the right home loan with an 'Off-set' account