An offset account is a transaction account that’s linked to your loan account. Your credit balance in the transaction account gets offset each day against the balance owing on your home loan, and this has the effect of reducing your interest payments.
Having an offset account is particularly valuable if you have a large income or a reasonable sum of money you can park in your transaction account. On the other hand, if your income is relatively low and you don’t amass much savings, then you may find an offset account arrangement costs too much in fees to make it worthwhile.
If your loan is for your home and you think there’s a possibility that you may end up renting your home out in the future, then you should definitely get expert advice about setting up your home loan with an offset account. This is because there could be substantial tax advantages down the track if you do so.
It’s worth noting that there are several types of loan arrangements that are similar to offset accounts, but the tax office view them differently. These are accounts such as ‘all-in-one’ accounts or accounts that let you deposit and withdraw money into your home loan.
Talk to an Ink Wealth Advisor for advice on whether an offset account is a smart move for you. We can talk you through what’s involved, and assist you with the arrangements if you’d like to establish your loan with an offset account. Contact us today to learn more.