What Are Offset Home Loans
If you have a good amount of savings, then offset home loans may be a good choice for you – and they may be an even better option if you’re a higher-rate tax payer. These kinds of mortgages are quite different from the other kinds and if you want to know how they could benefit you, then you need to know what they actually are and what they offer.
This article has information on these types of home loans, so if you’re interested; read on.
What are offset home loans?
As previously mentioned, these home loans are quite different to some of the other kinds on offer across a range of banks and lenders. They are linked to a savings account and work to fuse your savings and mortgage together.
Every month, the lender of the loan will look at how much cash you owe them – and then they will deduct a sum from whatever money you have in that account. This makes these kinds of home loans very different from other kinds, as you don’t pay a set amount each month, but instead the lender takes money from your savings to pay for what you owe them.
Another good thing is that you will still be able to access your savings if you want to. However, you need to remember that the more you offset, the faster you’ll pay off your loan.
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The interest you need to pay
The other thing that separates offset home loans from the other home loans is that the interest that you will need to pay is based on the difference between your home loan and your savings. And, although it cuts the total amount of interest that you pay, the home loan’s rates are more likely to be at a much higher price than the rates on other types of home loans.
Also, when you use your savings to make your home loan’s interest smaller, you won’t get any interest on your savings. But you also won’t need to pay any tax either, and this is why offset home loans can be good for higher rate tax payers.
It’s your choice whether you want to get an offset home loan or one of the other kinds, but it may be worth your while to keep the features of a few different home loans in mind before you apply. If you pay a high tax, or even if you have a good amount of savings, then offset home loans are worth considering.
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