Nope, there’s no double Dutch there but you are forgiven for thinking that I’m a little tongue tied. If you have a home loan like I do there’s no better friend than an offset account. In the financial planner’s world my loans best friend is an offset account. Today’s pocket tip is: Offset Accounts.
I want to own my home now!
Do I? No. But I have an offset account and I’m sooner to paying it off by having one (and using it correctly). It’s a bank account like the others where money goes in, money goes out and a little bit of interest is calculated along the way. Although this time it’s not interest earned, it’s interest saved. Now you’re talking.
Assuming the offest account with your bank is 100% offset, and this is the extent of technical speak I promise. Then for every $1 in the account the bank calculates your interest at $1 less on your loan. Yippee! More for me and less for you Mr. Bank Manager!
The more $1’s you have in the offset account the better you will be financially. We use our offset account as our bills and holiday savings account too, there’s no better place to save your money. Have savings? Well that same $1 in your savings account earns you interest (possibly much lower than your home loan interest saved) PLUS now you are paying tax. Paying tax or saving less interest on your home loan, I know which I’d prefer.
In short, like me, ask your bank in Townsville or wherever if you have an offset account and start owning your home sooner today! Not tomorrow!