What is It?
The first question a person will have is going to involve the “offset facility.” In essence, it is a simple bank account established to eliminate interest on a home loan. The idea is to save interest through a separate account to “offset” what is being charged against the mortgage. This is not possible with any other option.
How does it Work?
Let’s assume a person goes ahead and gets their home loan set up. Then any cash funds that the homeowner has, such as their regular pay or savings can be put into the offset account for immediate access. The amount would be transferred to the offset account to help generate new interest savings. A good example would be a mortgage that’s set at $200,000. And let’s say there is $10,000 put into the separate offset account. When this occurs, the established interest rate would only be charged on the remaining portion rather than the whole amount, which would be $190,000.
The main thing a person will ask is how much money will be saved, and that’s a good question to ask. In general, a person that is going to be putting $200,000 of loans under their name is going to have a set percentage of interest. This might be 4%. The person would end up saving the 4% interest charges on the $10,000 which over the life of a loan can add up.
Saving Money with Offset Facility
The common person wants nothing to do with expensive mortgages. They will look to find other ways to save money rather than losing all of it in one shot. This is why an offset account becomes pertinent for those who want to save money and get things going in the right direction. With the offset account, the amount of money being saved will be more than any savings account could have provided in the long-term. The same principle applies to children and their education. A fund can be set up to save money from a young age just through the mortgage being offset.
It is best to sit down with the lender to see what can be done. An offset facility is a great option for one and all. It is one of those options that is going to help get the balance down and eliminate excess interest.
Those who want to make sure the right option is being selected are told to speak with a professional as soon as possible. This will help with getting things started as needed and not wasting time. It is best to speak to a pro to see what is necessary.
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