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:
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 us 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.
