Why an offset account might save you $$$
There’s a good chance at the moment, that if you have a mortgage, you are well and truly enjoying the current low rates. But if you are a saver, then you might not be so over the moon. As a saver, you will be lucky to get an interest rate of 1.3% locked into a term deposit - which on $10,000 is a whole $130 per year, before tax is deducted.
This is where offset accounts are great. An offset account allows you to use your savings to lower the cost of your mortgage, and reduce the amount of interest that you pay.
If you are someone that likes to have a bit of money tucked away for a rainy day, or is saving for a goal such as a holiday or a wedding, then an offset account could be a great option for you.
Let’s take an example. Say you have savings of $100,000. With your savings, you might be lucky to make $1,300 in interest per year in the bank. But if you were to make your savings accounts offset accounts instead, you could reduce your mortgage by about $3,000 per year (this is worked out on a mortgage interest rate of 3%) You can also have a number of different accounts set up as offset accounts, so you could have your $100,000 spread across five different accounts - eg one for holidays, one for home renos, one for wedding, etc.
Unlike term deposits, with an offset account, your savings are available for access at any time. Which in the current Covid environment can be a great security net, as you are able to access it if things get tough.
If you are thinking an offset account could work for you, then give us a call on 03 441 1307 and let's chat!