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CBA Offset Can Mean Small Effort For Big Rewards
Commonwealth Bank
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Having fuel discount vouchers can mean some drivers drive a kilometre or two out of their way to save on fuel. Special-offer coupons for supermarkets may mean some shoppers go out of their way to visit for their next shampoo purchase. In general, most people are willing to make small changes to their routine in order to save money. What extent would you go to in order to save thousands, and possibly years on your home loan? The good news is that with an offset account, you don't have to do much at all.
An offset account, such as Commonwealth Bank's Mortgage Interest Saver Account (MISA), allows you to save on interest and work towards clearing your home loan debt faster.
Accounts such as MISA work by linking your Commonwealth Bank home loan to an offset account. All of the money in your MISA account works towards reducing the amount of interest you pay. How? The balance of your MISA account is deducted from your home loan account every day, before your home loan interest is calculated.
Using an offset account such as the one offered by Commonwealth Bank can have tax advantages. As the account earns no interest, there is no income tax to pay towards it.
Banks and lenders offer different features with their offset accounts. The downside of Commonwealth Bank's MISA is that while you can withdraw money when you need it, there is a minimum withdrawal amount of $500. Other banks offer offset accounts which can operate in exactly the same way as every day cheque and savings accounts, offering more flexibility than the Commonwealth Bank's MISA. In addition to the redraw limitations, opening a MISA account requires a minimum of $1,000.
Commonwealth Bank offer the MISA account on their 1 Year Guaranteed Rate, 12 Month Discounted Variable Rate and Standard Variable Rate home loans. The Economiser and Viridian Line of Credit home loans do not provide an offset option, while Commonwealth Bank's fixed rate loans provide the option for a partial offset.
With every dollar in your offset account working to reduce the amount of interest payable on your home loan, it doesn't take much effort to save thousands of dollars and pay off your home loan sooner.
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