How to save thousands without making any extra repayments
About the most affordable way to minimize your mortgage much faster is the appropriate use of a 100% Offset Account, which is like any typical checking account, with one major benefit, any money that is in the Offset Account minimizes the interest you pay on your mortgage every day.
An Offset Account is a savings account linked with your loan that lowers the interest you pay. Your lending institution will consider the money in this account and deduct it from what you owe before determining your interest.
All-in-one or 100% Offset Loans allow you to use your mortgage as your key financial product. This means you have one account into which you can pay all of your earnings and from which you can draw all your living costs by utilizing a credit card, EFTPOS, or a chequebook. You also make your home mortgage repayments from this account.
Because all your pay goes into your home loan account, you minimize the principal on which the interest is charged.
These kinds of accounts can make a huge difference in how quick you pay of your loan. Sure, you may take a number of steps back when you pay for living expenditures, but careful use of this sort of financial product can put you thousands of dollars ahead compared to pay-once-a-month home loan.
Your goal is to make your Offset Account the centrepiece of your finances. You want all your family income to go into it, and you want to keep the money in there as long as possible. Every day that money remains in there, you pay less interest on your home mortgage meaning your payments settle more of the principal so you pay less interest next month, and so on.