Revealing an old-age method to pay off your mortgage faster
It’s called ‘The offset‘ and you are about to learn:
- Why we love it
- How to use it
- And why you’ll love it
Ever wondered how you can make your money work harder for you? Consider an offset account your regular savings account, but with a twist. You can have multiple offset accounts – if you’re anything like me you’ll need one for each child savings, a holiday savings account, one for Christmas, one for those little personal indulgences – you get the idea – but here’s the best part: it also helps reduce the interest on your home loan each month which reduces your balance & loan term at a faster rate. It’s a win-win really!
Examples of how an offset works:
WITHOUT an offset account
Home loan $550,000
Offset savings account $0
Principal & interest repayment $3,600
Interest Charged $2,600
WITH an offset account
Home loan $550,000
Offset savings account $100,000
Principal & interest repayment $3,600
Interest charged $2,000
Isn’t it fascinating how the same payment can mean different things in different contexts? That’s the magic of compound interest. When you make a payment, the bank receives less, and your loan term and balance shrink faster. It’s like a financial diet for your loan!
If you’re feeling lost, give me a ring, and I’ll gladly talk you through it.
And for those wanting to up the anti with the offset account keeping reading
This is an age-old method of paying off your mortgage faster using a couple of simple switches.
- Set up an offset account
- Deposit 100% of your wages into your offset account
- Live off a credit card for the month (opt for a Qantas earning credit card for those who like to earn frequent flyer points)
- Keep living within your means and budget. (This is not a magic wand situation where money will suddenly appear)
- Pay off your credit card monthly by using your offset account.
- The concept is to maintain significant savings in your offset account over the course of a month to minimise the daily interest incurred, as the bank calculates interest daily.
Why not give it a shot and marvel as your interest charges dwindle, your balance shrinks, and your loan term shortens.
Not seeing the magic happen? No sweat, you can always revert back to your old ways.
As the wise Joyce Brothers once said, “If you change nothing, nothing will change.” So why not take the leap?