Is it a good idea to have an offset saving account ?
If you have a mortgage with a bank, you will most likely also have a saving account with them. Some of these saving accounts are called offset accounts. This means, if you have some money in your offset account, you will not pay interest on the same amount in your mortgage.
for example.
your mortgage is 300,000
interest on that mortgage monthly is 10% of 300,000 . which is say 3000
Now you have 100,000 in your offset account.
interest you will pay this month is 10% of 200,000 = 2000
This is just a straight forward calculation to show you how it works. I have had an offset account with a bank and I didnt think it worked that well. I then put the money in the offset account into actual principal repayment. that worked pretty well. This leads to another discussion matter - do I repay principal or interest' . From my personal experience is that everyone should always make a principal repayment.
If you have a mortgage with a bank, you will most likely also have a saving account with them. Some of these saving accounts are called offset accounts. This means, if you have some money in your offset account, you will not pay interest on the same amount in your mortgage.
for example.
your mortgage is 300,000
interest on that mortgage monthly is 10% of 300,000 . which is say 3000
Now you have 100,000 in your offset account.
interest you will pay this month is 10% of 200,000 = 2000
This is just a straight forward calculation to show you how it works. I have had an offset account with a bank and I didnt think it worked that well. I then put the money in the offset account into actual principal repayment. that worked pretty well. This leads to another discussion matter - do I repay principal or interest' . From my personal experience is that everyone should always make a principal repayment.
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