Home News Conflicting loan advice: Whether to include offset account

Conflicting loan advice: Whether to include offset account

Font size :
Nila Sweeney
Q. I have recently visited several mortgage brokers who have given me conflicting reports as to the best type of loan for me. I was interested in a loan with an offset account, which some brokers recommended but others did not. I really don’t know what to do.
 
My details are as follows: I am a first homebuyer with a $30,000 deposit and enough to pay for other expenses; I’m earning $39,000; and I have purchased a $114,000 property and need to borrow around $80,000.
 
I’m told that offset accounts really only work with high salaries, but how much is ‘high’? Should I consider a standard variable loan and just make additional repayments?
 
A. Given your circumstances, and the relatively low value you are borrowing relative to your salary, you should have the loan repaid within a short amount of time. This is likely to save you thousands of dollars in interest. Offset loans and lines of credits would only act as incentives to delay payment of the loan.
 
My advice would be to consider a standard variable rate loan. You can deposit additional funds into the loan and redraw them with only a few restrictions. You are correct that offset accounts are more effective when used with higher disposable incomes. Added to this, the benefits are compounded over time, and hopefully you won’t be paying off this loan for long.
 

With experts predicting rates to go down next year, standard variable rates should also decrease, which makes these loans even more attractive to borrowers such as yourself.

Related: Home Loan Calculator

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

New social housing aims to transform Ivanhoe Estate New social housing aims to transform Ivanhoe Estate

The sprawling redevelopment aims to boost the supply of affordable housing in Sydney Read more

A new suburb will be built in west Melbourne A new suburb will be built in west Melbourne Mount Atkinson will become home to more than 22,000 people over the next 15 years ... Read more

Surging house prices threaten liveability in Melbourne Surging house prices threaten liveability in Melbourne Analysts warn the city could become just as unaffordable as Sydney, if property trends continue ... Read more

More Aussies would benefit from regional hubs linked to cities More Aussies would benefit from regional hubs linked to cities Shorter commutes could spur higher home sales in regional towns, analysts say ... Read more

More mortgage news and articles

Sponsored Links

Sunday, Aug 20, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords