How to Use an Offset Account to Save on Your Home Loan

An offset account can be a powerful tool for saving money on your home loan. Essentially, an offset account is a savings or transaction account linked to your mortgage. The balance in this account is offset against your loan balance, reducing the interest you pay and potentially shortening your loan term.

For example, if you have a home loan of $500,000 and $50,000 in your offset account, you will only pay interest on $450,000. This can significantly reduce the amount of interest you accrue over the life of the loan. A home loan calculator can help you understand how much you can save using this strategy.

An offset account is particularly beneficial for those with irregular income or lump sum savings, as it allows you to make your money work harder. It's also an attractive option for investors who might want to keep their funds liquid while reducing their interest costs. A mortgage broker can help you determine if an offset account is suitable for your financial situation and which lenders offer the best products.

Remember, not all home loans come with an offset account feature, and some may have additional fees. Consulting a home loan expert can help you find the best option that maximises your savings and fits your financial goals.

*Disclaimer: The content provided is for informational purposes only and is not financial advice. Please consult a professional advisor to discuss your specific situation.*