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.

Advantages

• 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.

Disadvantages

• 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.

General Offset Account Home Loan Fees

• 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.

Loan Term And Repayment Types

• 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.

If you would like some more information on offset account home loans, contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.