lifestyle n

A mortgage offset account can offer the ideal combination of easy access to cash savings while helping you pay off your home loan sooner. Our friends at ME Bank explain.

An offset account is an everyday account linked to your home loan. Instead of being paid separate interest on the linked account, the balance is deducted from (or ‘offset’ against) your home loan when loan interest charges are calculated.

Let’s say, for instance, that you have a home loan of $400,000 and $10,000 sitting in the offset account. Instead of paying interest on the full $400,000, the monthly charge will be based on a loan balance of $390,000, thereby providing a big saving on interest costs. 

But the benefits don’t end there. As your regular loan repayments stay the same, the reduction in interest charges means more of each payment comes straight off the loan balance. This reduces the following month’s interest cost, and in this way the loan pendulum starts to swing in your favour.

Plan your cash needs

The more money you have in the linked account, the bigger the savings on home loan interest, and some clever cash management can really boost the benefits of a mortgage offset account.
One strategy worth considering is to use your credit card to pay for a range of household expenses each month, while leaving as much cash as possible in the offset account. When your card statement arrives, dip into the offset account to pay off your card balance in full before interest charges apply. This way, you maximise the balance of the linked account for as long as possible.

If you’re saving for personal goals like an overseas holiday, an offset account can also be used to build funds while still helping you forge ahead with your home loan.

 

This article was provided by ME Bank, a bank that is 100% owned by industry super funds, including Vision Super.

Members Equity Bank Limited ABN 56 070 887 679.

Latest videos

  • [HD] Boost your super before 30 June 2017!
  • Lowest Cost Sustainable Super
  • [HD] Sustainable super with Vision
  • Love lower fees with Vision Super.
  • Set up your super in seconds with Vision Super.
  • Relax & retire happy with Vision Super.
  • [HD] Our improved online services
  • Super Women
  • [HD] Financial advice for members by members
  • Welcome to Vision Super

Follow us on social media today

Upcoming events

8 Aug 2017
Time: 05:00 pm - 07:30 pm
Location: The Dome Geelong Library & Heritage Centre

23 Aug 2017
Time: 05:30 pm - 07:00 pm
Location: Vision Super Offices

Twitter feed

RT @Stephen_Rowe17: Great to meet Mike Tyler CEO and Staff @CityOfCasey yesterday Civic https://t.co/GFR9h5u3eU
About 13 hours ago
Thanks to everyone who said hello to us during orientation week. Keep an eye out for us (& our Snapchat filters) at… https://t.co/gqQlRjTt35
27 July 2017

Twitter CEO feed

RT @LukeBurnett19: Wrest Point casino is hosting a full house for the @LGATasmania conference dinner tonight. LGAT Visionsuper https://t.…
About 18 hours ago
Coles -pressure on households | https://t.co/gKacq4mJgP -over 6 yrs Childcare up 58%, utilities 38% and edu 30% https://t.co/jHnhpfrVc1
About 19 hours ago