During the week I met with a married couple who were looking to refinance. They were

wanting to know more about mortgage offset accounts.

Q. What exactly are the benefits of a mortgage Offset account ?

The key to this question is, why is an offset account better than a standard home

loan? To start with, if you have any sum of money sitting in your offset account,

that sum of money will directly offset the interest payable on your debt. Eg. If

your mortgage is $200,000 and you have an offset account with $5,000 sitting in it,

then you\’ll be paying interest daily on $195,000. The result is a saving in interest

of approx $30 per month (based on an interest rate of 7%).

Now those savings may not sound like too much, but \’interest saved is interest

earned\’ !

In theory it sounds great, but realistically the everyday Australian doesn\’t have a

\’lazy\’ $5,000 just sitting around in an offset account. If you want a loan with a set

repayment and a set term with the option of having any excess or surplus funds

working for you, then the mortgage offset account will suit you

Personally, I do consider the offset account to be a better home loan than your

standard 25 or 30 year loan, but it is by no means the best loan out there on the

market as the benefits certainly aren\’t as great as one first thought !