Having an offset account linked to your Home Loan, could potentially save you on interest costs over the life of the loan.
For example, if your Home Loan balance is $500,000.00 and you have $100,000.00 in the linked offset account, you will only be charged interest on $400,000.00 of the loan amount.
Interest costs on a $500,000.00 Loan would be $2,500.00 per month and on a $400,000.00 Loan would be $2,000.00 per month (using an interest rate of 6%).
The $500.00 you save in interest costs, means more of your monthly payment will be applied to the principal portion of the Loan and may enable you to pay out the Loan sooner (provided you consistently have funds in the offset account).
Offset accounts can be used like any other transaction account, with internet banking and card access available (you can also make your loan repayments from these accounts and have your income deposited to these accounts).
Note : Banks generally require you to have what is called a Package Loan to have access to offset accounts, these type of Loans attract an annual fee (but if you have the surplus funds , the annual cost is small, compared to what you can save in interest).
Please do not hesitate to contact Gillian Burns on 02 6102 4333 if you have any questions.
Milestone Financial Services ABN 68 100 591 508 is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee. This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. The examples used are illustrative only and are not an estimate of the investment returns you will receive or fees and costs you will incur. If you decide to purchase or vary a financial product, your financial adviser, Milestone Financial Services Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/ or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information on (02) 6102 4333.
