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For those who are lucky/privileged enough to have one,there’s a lot to like about owning your own home. Having a roof over your head is pretty cool,and being part of the Australian property market is ... fine,I guess. But one thing they don’t warn you about is how much you have to talk (and think) about your damn mortgage.
For something that feels like it should be “set and forget”,the nagging questions are near constant. What rate are you on? Should you switch to a different lender? Should you contribute more/less to your monthly repayments? Do you have an offset account? What even is an offset account?
Plenty of people have mortgage offset accounts,but many don’t know how to maximise their potential.Aresna Villanueva
Those last two questions are what I’m hoping to shed some light on,along with some ways you can get the absolute most out of your offset (if you have one) and save money on your mortgage each month.
To start,an offset account is a transaction account that’s linked to your home loan. Any money you keep in that account is offset against your mortgage,reducing the amount of interest you pay,and you can access all the money in your offset account whenever you want,without restriction.
Offset accounts are popular in Australia,with homeowners squirrelling away a whopping in offsets as of December last year in an effort to buffer against potential future rate rises. Part of this boom can also be attributed to many people rolling off the ultra-low fixed rates of the pandemic,as many fixed rate home loans do not offer offset accounts.
What’s the problem?
Despite their popularity,it’s likely many of us aren’t using offset accounts to their full potential,missing out on significant home loan savings both in the short and long term.
What you can do about it
Here are some things you could be doing:
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.