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.
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