Offset accounts are transaction accounts linked to your home loans which can help to reduce the amount of interest that you pay on your home loan
Feel at home with Home Loans by understanding how you can pay less interest on your home loan using an offset account.
If your goal is to repay your home loan in the shortest time possible, you need to make sure you have a loan that doesn't charge you extra costs if you make higher than the minimum repayments.
With the right type of home loan, there are several ways to pay off your loan faster. One of the simplest ways is to pay half the monthly repayment fortnightly. By paying half the monthly repayment every fortnight, essentially you take advantage of the 26
fortnights in a calendar year. This can really work in your favour as you're effectively making an extra monthly payment across the course of a year, which if you get paid fortnightly you mightn't even notice.
This can make a significant difference over the life of the loan.
Another option is linking an offset account to your home loan and using this account as your main transaction account. You might deposit your salary into this account and park any extra savings here. The balance that interest is calculated on will be reduced by the amount in your offset account, effectively reducing the monthly interest payable.
You need to be aware though that you will not get paid interest on your savings in your offset account.
You also have the option of paying more than your required monthly repayment amount to pay your mortgage off faster and build equity. When the opportunity arises, you can also make lump summary payments. A tax refund is one example of a lump sum that could form a handy extra repayment.
Showing you how you could pay off your home loan faster because Home Loans are what we do.