Lending Hand Finance - Home Loans (Ready, Set, Offset)

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Ready, Set, Offset

Mortgage reduction is a priority for most property owners, with debt free homeownership the goal. But what are the most effective ways to achieve this?

The ‘offset account’ is one tool that is growing in popularity with borrowers looking to drive their mortgage down, but still have access to cash should they need to draw on it quickly.

An offset account is simply a savings account that’s attached to your home loan. It operates like a regular transaction account but any money that goes into it is deducted from your loan balance before the interest is calculated. Your savings remain in the offset account and can be easily accessed when needed.

Why use an offset account?
Some of the key benefits of using an offset account include:

Your income works for you the minute it lands in your account as it saves interest on your home loan.
While your income and savings work to reduce your loan, your funds are still easily accessible should you require cash quickly.
Though interest isn’t paid on your savings, through using an offset account you’re saving through lowering the principal of your mortgage, which means paying less interest!
Since the ‘earnings’ in the account go towards paying off your mortgage, it’s not considered taxable income.

Is an offset account right for me?
An offset account is an effective mortgage reduction tool for most borrowers as it allows easy access to your cash, but still ensures that regular payments go towards reducing the loan. Offset accounts are particularly effective for borrowers with higher disposable incomes, since the larger amount of excess funds placed into a mortgage has a greater impact on reducing the loan’s principal.

If you’re interested in looking at how an offset account might work for you, ask us what products we recommend. When discussing your options keep the following points in mind:

There are two types of offset accounts, ‘partial’ and ‘full’. Partial offset accounts are usually less beneficial than full offset accounts as the interest rate is generally below the mortgage rate.
Some offset accounts charge monthly fees or transaction fees, and you may be charged a higher interest rate on your mortgage for the privilege of adding an offset facility.
Most offset accounts require a minimum balance.
You may incur charges if you decide to refinance your current home loan to include an offset account.

Did You Know?

An offset account can be a powerful tool to pay your mortgage off quicker. Contact Lending Hand Finance to find out how on
1300 850 545 or

Mortgage & Finance Association of Australia

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How can I pay off my mortgage faster? Should I refinance, introduce redraw, maybe an mortgage offset account or opt for a fixed rate. At Lending Hand Finance, we will explain all the lingo and determine what is best for you.