Best Home Loan Rates For Property Investing

Why Are Offset Home Loans Great

When searching for the best home loan rates, you may come across offset home loans. However, these are only good for certain borrowers and specific needs. For anybody who is a high tax payer, or for people who have a lot of money in savings, these kinds of home loans are more than likely to be the best option – but for those who simply want to borrow and pay back, other loans might be far more beneficial.

So, why are offset home loans great for a specific type of borrower? Let’s take a look at the features and benefits of this type of mortgage deal to find out.

Offset home loans

When you know what offset home loans are and what they do, you’ll understand why they can only benefit some people. You will also find out whether they’re the best kind of home loan for you and your needs.

Unlike most other kinds of home loans, offset home loans are linked to a savings account – and this will combine the money in your savings with the money owed on your chosen home loan. This feature alone makes them very different, but there is still more that separates offset home loans from the rest.

Every month, your lender will take a look at your savings and see how much you owe them. They’ll deduct the money from your savings for the loan, instead of taking it out of your current (or main) account. You will still have access to your savings in the meantime, just remember that the home loan will be paid off faster if you offset more money.

The fact that you don’t pay a set amount each month for the property or interest also makes this kind of home loan unique, since your lender will take the money from your savings account as they see fit month on month.

Interest and offset home loans

So, how does interest on offset home loans work? Well, the money that will be taken for interest will be based on the difference between the money in your savings and what you owe on your home loan. It’s important to consider that the interest on your savings will be frozen in these instances, so you won’t accrue any extra money for the duration of the loan.

Why are they good for high tax payers?

You may understand why people with a lot of money in savings can benefit from offset home loans, but why high tax payers? With offset home loans, you won’t need to pay any tax on the loan, which won’t add to the amount paid for those that already pay a high amount on tax.