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How an Offset account can save you thousands on your home loan

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Do you have money sitting around in a low interest rate savings account while paying higher interest on your home loan? If so, then you may be interested in an Offset Account. 

What is an Offset Account?

A Mortgage Offset account is simply an at-call savings account linked to your home loan, so you can pay off your home loan faster. Over time, you'll pay less interest on your home loan, helping you to reduce your loan balance or build your level of equity in the property.

How does an Offset Account work?

When you deposit funds into your linked Offset account, this amount is deducted from the loan balance before interest is calculated. Therefore, any extra money in your Offset account saves you interest on your home loan - thus shortening the term of your loan. Plus, if needed, you can still access your Offset account funds immediately. 

For example, if you have a $100,000 home loan and $15,000 in your Offset account, you would only pay interest on a notional loan balance of $85,000*.

Can I have more than one Offset Account?

Each Offset account can only be linked to one Home Loan. However, you can have multiple Offset accounts to cater for multiple Home Loans (Eg. Fixed & Variable loans).  Also, the names on the Mortgage Offset account must match the names on the Home Loan, for joint loans.

How do I qualify for an Offset Account?

To qualify for an Orange Credit Union Offset Account, you must have an open Orange Credit Union home loan. 

How is an Offset Account different to a Redraw facility on my home loan?

Offset accounts and redraw facilities are similar in that they are both (1) attached to a home loan with a primary goal of reducing interest paid on the home loan and (2) provide access to savings. Offset accounts usually have easier access with minimal or no restrictions. Some redraw accounts also have fees attached to withdrawing funds. 

Our team is here to help

For more useful information on your everyday banking in Orange, NSW, home loan interest rates, refinance rates or ways to increase the value of your home, contact Orange Credit Union’s friendly team on (02) 6362 4466 Monday to Friday 9:15am to 5pm.

* conditions apply

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