The offset mortgage is a concept that is mainly based in Australia. The concept mainly involves offsetting your savings against the mortgage that you have in order to reduce the amount of the interest. But, still the idea that a debt can actually help you in saving money may not seem to be that much probable. However, this true that the offset mortgage loan can actually help you in saving money on the debt payments.
What is so special about offset mortgages?
In case of an offset mortgage loan, you are simply required to pay interest only on the actual debt amount. There are mainly two types of mortgages which follows the principal of the offset mortgages. The current account mortgages are the ones that give the mortgage holders single account which has again a large overdraft. All of the savings, the current accounts, the credit cards and the loans are all rolled into single account; that too these are going to have a single interest rate as per the lenders. So, you will have to worry about only one payment.
However, in case of the offset mortgages, the lenders allow you as the consumer to link together all of the separate accounts. With the offset mortgages you can have either a lower payment or a shorter term. In case of the lower payments, the mortgage loan term remains the same and yet you can make low payments. On the other hand, the shorter term can help you keep the payment amount same though you can actually shorten the term of the mortgage.
According to the analysts, most of the consumers choose the shorter term one and very few go for the lower payment option against the offset mortgages. However, if you are planning to get an offset mortgage, don’t end up believing in the myths which are involved with the offset mortgages.
Some of the myths which are associated with the offset mortgages are like that the offset mortgages are too expensive and that are also very restrictive. However, in truth with the help of the offset mortgages, you can get your money quickly enough, even small savings can make quite a big difference. In addition to this, you should also know that the interest rate on these mortgages is not that high. However, like any other product in case of the offset mortgages too there are competitive rates and so it would be better for you to shop around so that you can get the best of the interest rates on these mortgages.
Another advantage of an offset mortgage loan is that, you are not required to have all of your savings into a single account. You can actually have several savings accounts which can be offset against the mortgage. In fact, your family members too can have the option to offset their savings account offset against your mortgage.
Furthermore, once you offset the savings account with the mortgage, you can go on adding more savings to that account.
Jessica Bennet is the author of MortgageFit.com. She covers mortgae loan, real estate, refinance related topics.
Jessica Bennet with her vast experience in the mortgage industry has been associated with the MortgageFit Community as a Mentor. Not only does she participate in the community forums to give her suggestions, but also makes her contributions through different articles on mortgage.