What is an Offset Account?
An account of a regular bank that is linked with your home loan is known as an Offset Account. You are free to use that account as a savings or a salaried account. After the loan amount is deducted the amount that remains as balance is an offset against the loan amount. The more money you have as an offset amount it will help in paying off the loan swiftly.
How to use a home loan offset calculator?
You can use this loan offset calculator to know the offset amount in your account. If you can accumulate a good amount of offset value, then it will be very easy for you to pay off the loan swiftly. You can get your rate of interest reduced and start transferring the saved money to the loan’s personal amount. You have to just input the value in the home loan offset calculator and it will give you the details.
- The term of the loan and the tenure of the loan
- The frequency of the repayment amount
- The accumulated offset amount
- The beginning year of the Offset
How do home loan offset accounts work?
The working of the offset loan account is similar to any regular bank account. The only difference is that it is attached to the home loan account. The offset account will save your charges on interest rather than earning you the interest. It works when you offset the principal loan amount.
This does not mean that your money in the offset amount is stuck. In Fact, you can utilize that money for all minds of expenditure if need be. Although the amount of interest reduces if money is withdrawn it will let you have the complete control on your money. The offset home loan calculator will make you understand the denominations better.