How To Pay off Your Loan Faster

With an offset mortgage, the interest on your home loan is calculated based on the difference between the balance of your mortgage and the balance of any money you have sitting in your linked offset accounts.  The more money you sit in your accounts, the less interest your pay on your mortgage.  You don’t earn any interest on these funds but usually the interest you save outweighs the interest you’d gain by having it in a savings account.    

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 Benefits of an offset mortgages are:

• You can keep your money in separate accounts eg everyday, savings, bills,  kids accounts etc so your money isn’t all pooled together in one account like it is with a revolving credit facility.  This makes it easy to keep track of your funds and helps with saving and budgeting. 

• When you save interest on your offset loan, the interest you save automatically goes into your loan principal ensuring you are actually paying off your loan faster.  

• If you have family members within the same bank who have money sitting in their accounts, they can nominate to link their accounts up with your offset loan so you get the benefit of their money, while they’re still able to use it.