www.wilsonfinancial.com.au
  • About Us
    • Why Use Us?
    • In The Community
    • Our Team
    • Testimonials
    • Enquiries
    • Privacy Statement
  • Covid-19
    • Hardship Contact Lines - Mortgages
    • Hardship Contact Lines - Equipment
  • Calculators
    • Stamp Duty Calculator
    • Income Tax Calculator
    • Borrowing Power Calculator
    • Budget Planner
    • Extra Repayment Calculator
    • Home Loan Offset Calculator
    • Property Selling Cost Calculator
    • Property Buying Costs Calculator
  • Home Loans
    • Investment Loans
    • Aussie Expats and Foreign Investors
    • Deposit Bonds
    • Medical Professionals
  • Financial Planning
  • Cars & Equipment
    • Car, Truck and Equipment Finance Calculator
    • Get A Quote
    • Car Buying Service
    • Car Loan Application Online
    • Solar Finance
    • Car Buyers Guide
  • Blog
  • More
    • Contacts
    • Resources
    • Newsletter Sign Up
    • Testimonials
    • Privacy Policy
    • Glossary

Why does everybody rave about 100% offset accounts?

22/7/2015

0 Comments

 
Picture
What is an offset account?

An offset account is a separate account to your home loan, which is linked in the banks computer systems, so that the balance held in the offset account, is daily, offset against the interest accruing on your home loan. For example, if you set $10,000 into your home loan offset account for a month, on a loan of 6.90% interest, you would save around $57 interest for that month. The effect of placing this amount directly into the redraw account of the loan is exactly the same (for a variable loan) interest  savings.

Why use an offset and not redraw

100% offset accounts are normally easier to access, and can be run as transaction accounts for your income, bills, and other needs. Some banks offer unlimited offset accounts where you can run lots of offset accounts against the same home loan. Offset accounts also help you to quarantine the extra repayments. Further to this, they may offer you savings in future should you decide to turn an owner occupied home loan into an investment, read more on this here.

Why do offsets and fixed rates not mix


The banks do not have functionality to offer offset accounts on fixed rates. This is largely because fixed rates are bought at set wholesale prices for and paid for in advance. Any offset made against this would be a loss by the bank and therefore is not a financially viable product for the banks. 

Why not just put my money into a savings account or term deposit and earn interest?

When you 'save' money in terms of less interest, the tax office doesn't ask for a slice of your savings. However, the moment you put money into an interest bearing account, you will need to declare this in your tax return and are likely pay tax on it at your top marginal tax rate. For many this is 32c in the dollar, so your savings are quickly eroded by the tax man.


How do I get an offset account

0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

     

    Author

    Liz Wilson has been working in finance for nineteen years now. She regularly blogs on industry topics and here you will find over a hundred personally written blog topics and case studies...

    Picture

    Archives

    September 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    June 2019
    February 2018
    July 2017
    April 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    August 2014
    June 2014
    May 2014
    April 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    February 2013
    January 2013
    November 2012

    Categories

    All
    Extra Wierd
    Fun
    General
    Home Loan Features
    Industry News
    Kiva
    Lending
    Mortgage Broking
    Statistics
    Useful
    Wierd

    RSS Feed

Powered by Create your own unique website with customizable templates.