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Mortgage Offset Accounts: Saving Australians Time & Money On Their Home Loan

Mortgage Offset Accounts:
Saving Australians Time & Money On Their Home Loan

When the time comes to choose a home loan,
it’s vital to evaluate all of your available options,
which can be a long and drawn out process, especially for first time buyers.
However, if you wish to save your time and money as well as unnecessary stress,
you may want to look further into a mortgage offset account.

Mortgage Refinance Sydney, Debt Consolidation Melbourne, Debt Management Solutions Adelaide

Offsetting Your Mortgage

Like the name suggests, an offset account offsets an existing balance against the balance of your home loan, leading to less interest being paid. As time passes, your savings on interest will be significant, leading to a shorter period of repayments on your home loan.

For a quick example of how offset accounts work, if you have a home loan of $300k and have $20k in your offset account, you’ll only be paying interest on 280k. Due to home loan interest being calculated daily, every dollar in your offset account can help reduce your home loan interest.

As well as the above mentioned benefits, offset accounts are set up so that they match the interest rate of the mortgage, meaning that the interest earned in the account will offset the mortgage interest. These further savings are completely tax-free.

Beneficial To Investors

This financial plan is very attractive for property investors, who enjoy added tax benefits by starting an interest-only loan with an attached offset account.

An interest-only home loan with an offset attachment allows investors to minimise their monthly repayments, as well as their non-deductable debt while increasing their deductable debt. These loans are also beneficial in securing a good return when purchasing a principal place of residence and transforming your existing home into your investment property.

By starting an interest-only loan with an offset account, you can reduce the interest payable on your mortgage by practicing the right level of financial discipline and making regular repayments into the offset account.

Further Benefits Of An Offset Account On An Interest Only Loan

Tax Deductions: If it’s clear that the purpose of the loan is for investment purposes, tax deductions can be claimed for interest paid on the property.

Lower Repayments: You can free up cash for other investments by paying the interest-only portion of the loan, making periodic repayments lower.

Contingency Buffer: An interest-only loan with an offset account provides a contingency buffer which can cover unexpected costs such as a lifestyle change such as turning your personal home into an investment property.

Separation Of Debt: Interest-only home loans allow for the original debt to be kept separate, meaning your savings can be placed into the offset account against non-taxable-deductable debts.

How To Set Up Your Own Mortgage Offset Account

Before you commit to a loan with an offset account, it’s vital that you sit down with a professional and take an honest and objective look at your financial position. You have to identify the monthly amount that you can afford to place into the offset account while discussing a serious investment strategy to see whether this type of strategy is right for you and your goals.

For a step in the right direction, get in touch with ChapterTwo consultants today for some free financial advice. We are available on 1300 344 433 to speak further about your financial goals and what options you have.

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