January 31, 2016
This feature is generally only available with Standard Variable Home Loans and Professional Pack Loans. It is certainly not a feature associated with:
- No Frills Loans
- Fixed Rate Loans
It is interesting to note that due to the competitive nature of the lending industry, certain lenders do offer the 100% offset feature with no frills loans and fixed rate loans.
With 100% offset loans, you loan is linked to a bank account you have with that same bank, (your 100% offset bank account).
In the main, the 100% offset bank account is your everyday transactional bank account. For every dollar you have in your 100% offset bank account, the bank does not charge interest on that dollar of your home loan.
If you have a loan with the 100% offset feature, all of your savings should be held within the 100% offset account. That is, consolidate all of your savings into the one account, the offset account.
The offset account will save you interest on your home loan, whilst an interest bearing account will earn you interest, thus raising tax implications.
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