10:01 05 June 2013
Offset mortgage is the type of mortgage that is linked to one or more of your savings account that is held at the same banking institution. The money you have on your savings account can be used to offset your mortgage balance.
Initial loan balance or credit limit is established early on together with interest rate on the loan. The savings account in this scenario is a non-bearing interest account. This allows the bank to earn profit on any balance on your savings account.
Offset mortgage is a very good option for people who save money religiously. Even though you will not earn interest on your savings account, you’ll enjoy lower interest rate on the mortgage.
The forgone interest is non-taxable payment that is put directly to the mortgage balance. Thus, it means a huge savings for both of you and your lending institution.
When thinking about taking out mortgage, always consider this option. Talk to your bank about it and discuss thoroughly how it can benefit you. Don’t be afraid to ask questions to fully understand this type of mortgage.
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