May 18, 2022


Its All About The Money

Offsets Don’t Always Make Sense, Know What To Consider

14 min read

Pretty much all of our customers come to us and ask us if they can get an offset with their mortgage, and the thesis behind offsets is pretty clear. You have additional money, you put it in the offset, it offsets your interest, you pay less interest, but you should make sure that it’s right for you. And there are a few reasons why you might not want to consider an offset. Typically lower loan amounts, you’re paying extra for the offset, and you typically pay a few hundred dollars a year.

And so if you have a smaller loan amount, it can be hard to make use of that offset. And you actually end up paying more in fees than the interest you’re saving. And the other reason is if you don’t actually put enough money into that offset, then that may also mean that you are paying for something that you’re really not getting the use of. And the last thing that we see with offsets is offsets kind of turn your mortgage into a piggy bank and it makes it all too easy to dip into your mortgage and to drawback out and to your loan balance to go up. And this means you’re actually not paying off your loan faster and whilst you’re offset saving you money, you’re actually to be in debt for longer, which is costing you more interest overall. So before you take out an offset, make sure it’s right for you. Have a chat with a UNO broker and they can sort that out for you.

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Source: uno Home Loans

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