As rates rise, offset accounts are becoming more important than many people realise.
That’s because an offset account reduces the interest charged on your loan.
If, say, you have $700,000 outstanding on your loan and $40,000 in offset, you pay interest on only $660,000 (i.e. $700k minus $40k).
This is a hypothetical example – your situation may differ – that shows the power of offset.
As rates rise, the benefit compounds
As rates rise, the interest saved on that hypothetical $40,000 increases.
That means:
stronger savings without changing your repayments.
faster loan reduction over time.
better use of your cash than standard savings.
Making it work properly
Not all offset setups are equal.
Things like account structure, cash flow and loan features can make a big difference.
Contact me if you want help reviewing how your offset is set up and whether it’s working as effectively as it could in the current environment.
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