Why Are Offset Accounts Available?

Offset accounts are available so a mortgage broker’s clients can offset funds that have not been used for renovation or home improvement purposes towards interest payable. A mortgage offset account is a type of transactional account that is linked to an existing mortgage and allows clients to make deposits and withdrawals as needed. The mortgage offset account balance is then offset against the balance currently owed on a home loan. Interest will only be charged on the difference in funds between both accounts. The more money that is in a mortgage offset account can result in more money being saved on mortgage repayments. 

For example, if a client has a home loan balance of $250,000 and a mortgage offset account balance of $50,000, the client will only be charged interest on the balance difference of $200,000. Mortgage offset accounts are great options for clients looking to make additional mortgage repayments consistently. Additionally, a mortgage offset account can allow a client to save both time and money on their mortgage repayments. 

Due to additional mortgage repayments being allocated to a home loan’s principal amount, a client who has a mortgage offset account has the potential to pay off their mortgage balance sooner than originally expected. Depending on the mortgage offset account balance, a client has the potential to shave years off of their home loan terms. 

Current home loan holders interested in learning more about mortgage offset accounts should reach out to their existing mortgage broker to gather additional information and learn of any rules and requirements regarding additional repayments.