1. What Is An Offset Home Loan?

An offset home loan is a mortgage product that links your savings account to your home loan. The balance in your savings account is "offset" against your loan balance, reducing the interest you pay while maintaining full access to your savings.

2. How Does The Calculator Work?

The calculator uses the offset loan formula:

Where:

• \( Loan \) — Total loan amount ($)
• \( Savings \) — Amount in offset savings account ($)
• \( Rate \) — Annual interest rate (%)

Explanation: This formula calculates the interest payable by subtracting your savings from your loan balance before applying the interest rate.

3. Benefits Of Offset Accounts

Details: Offset accounts can significantly reduce the amount of interest paid over the life of a loan, potentially shortening the loan term while maintaining liquidity of your savings.

4. Using The Calculator

Tips: Enter your total loan amount, the amount in your offset savings account, and your annual interest rate. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest calculated on offset loans?
A: Most lenders calculate interest daily and charge it monthly, which maximizes the benefit of your offset savings.

Q2: Are there fees associated with offset accounts?
A: Some lenders may charge higher fees or interest rates for offset accounts compared to standard home loans.

Q3: Can I access my savings in an offset account?
A: Yes, one of the main benefits is that your savings remain fully accessible while still reducing your interest payments.

Q4: Is there a limit to how much I can offset?
A: Typically, you can offset up to 100% of your loan balance, but check with your specific lender for any limitations.

Q5: Are offset accounts available for investment properties?
A: Yes, many lenders offer offset facilities for both owner-occupied and investment property loans.