A great mortgage broker should be able to assist their clients with any questions that may arise regarding mortgage offset accounts. There are many advantages and disadvantages of a mortgage offset account that a mortgage broker should be aware of and inform their clients about before they make the decision to open an offset account.
Advantages of a Mortgage Offset Account:
- A client can potentially pay less in interest on their current home loan by keeping a substantial balance in their mortgage offset account
- A mortgage offset account can allow an investor to receive potential tax benefits
- A client can withdraw and deposit funds into their mortgage offset account as needed due to its flexibility, though consistent withdrawals can negatively affect the potential benefits a client can receive through their offset account
- A client can maximise their savings potential by using a mortgage offset account and benefit from the money they will save in interest and time they will save on paying their home loan in full
Disadvantages of a Mortgage Offset Account:
- A home loan with a mortgage offset account will typically have higher interest rates than without an offset account, so a client should speak with their mortgage broker to inquire if opening an offset is worth it
- Mortgage offset accounts typically have higher fees than traditional transaction bank accounts, so a client should be informed of all fees required to be paid before opening an account
- If a client makes consistent withdrawals from their mortgage offset account, they may not receive the potential benefits of saving time on paying off their home loan and saving money on interest
- For a client to receive the benefits of saving time and money on their home loan, they will need to have a substantial amount of funds in their offset account which is not achievable for all individuals