Problems with interest rates and repayments? Ask for home loan help.
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Mortgage offset is an account offered by many lenders where the interest accrued is not paid to the deposit account but deducted or “offset” against the interest charged on a loan account. For this offset to exist the loan and the deposit account must be in exactly the same name (s).
When this is so the Australian Taxation Office presently does not regard the interest offset against the home loan interest as income and hence tax may not be payable (please make your own enquiries with your taxation advisor to confirm the taxation status of your offset account) . The benefit of this is that you pay less interest on your loan, shortening the term whilst still having access to your own funds in a separate account.
The access to your funds may be easier than having to avail of a redraw if you wish to get back extra funds deposited directly to the loan account.
When opening an offset account check with your lender:
- The rate applied to the offset balance is at the same rate as the home loan as some offset accounts are at the interest rate applicable to the deposit interest rate?
- Are extra fees applicable?
- If deposit funds are greater than the loan balance, what happens to the extra interest?
Call Your Local Finance mortgage broker on 1300 787 665 to discuss your options.
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