Offset Accounts - How do they work?
Mortgage Choice - Jody Shadgett
Investment Loans, Mortgage Brokers, First Home Buyers
An interest offset account is a completely separate account, usually a transaction account and works like a savings account but it is linked to a home or investment loan. The loan balance is offset by the balance of funds in the offset account this reduces the net amount that you owe and saves you in interest. The daily interest is calculated by the lender on the home loan the interest will be calculated based on the net balance.
Having funds in the offset account or paying those funds into your loan itself has the same effect on the interest you are charged. Having the funds in the offset account however allows you to use the funds like you would with a normal bank account.
A mortgage offset account can be used as an all in one account to manage your cash flow. If you have an investment loan and a home loan you could direct your salary as well as any rental income into the offset account linked to your home loan which would give you the advantage of having both income sources contribute to offsetting your home loan. Please seek professional tax advice on how this affects your taxable income. If you have any questions on setting up an offset account please contact Jody Shadgett on 0447 573 865 or email [email protected]
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