Saving mortgage interest with revolving credit and offset accounts

Written By Kim Manunui

So you have a mortgage and want to look at ways to reduce interest paid. Putting a portion on revolving credit and using offset accounts could be the answer.

Your mortgage can be split into different accounts to maximise interest savings. You might like to have a portion fixed at lower rates set for one or two years then have some on variable rates that work for you to lower interest, taking years off your mortgage.

A revolving credit facility is a working account with an available limit where you have your salary paid into it, reducing the balance interest is charged on and you use that account for spending which increases it until monies are paid back into it. Having an available limited is handy for unexpected expenses and can be reduced later and while it’s great smashing out the mortgage you do need to be disciplined with it to ensure its consistently reducing and you’re not racking the balance up to the limit and increasing the amount interest is charged on as its on a variable rate.

An offset account links savings you have to your mortgage meaning the portion that would be charged in interest is applied to principal. Say you have $300k on mortgage and $50k in savings, you won’t earn any interest on the $50k savings but you’ll only be charged interest on $250k. You can have multiple accounts linked to an offset account including children’s savings, travel, bills accounts etc and can also have parents savings accounts linked to yours so monies in their account can offset your mortgage, it might cost you an especially nice Christmas present but it’s a way for parents to help their children while retaining their funds. Importantly the money in offset accounts remain available to you to use at will and is not tied up in any way with the interest offset based on the balance. If you have a windfall, offset it against your mortgage and have it still available to use, essentially achieving mortgage rate returns on your investments.

At Infinance, we take care to structure loans just right to suit your individual circumstances.

For more on the above and to look at ways to get the most out your mortgage, click on the link below.

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Kim Manunui

Hi, I’m Kim and I work with a great team to help individuals, as well as small and not so small businesses get their message, product and services to the world using digital media and creating wonderful websites that don’t cost the earth.

I was born in Canada, and grew up around Vancouver and the mountains of British Columbia. My love of pristine environments led me to New Zealand and eventually to the mountains, lakes and rivers of the central North Island which is home. My family’s heritage is here, and it’s from here that Korio traverses the planet.

The digital world is never static and neither are we.

And I say ‘we’ because I work with an awesome group of talented people who I gather together as required to complete a project.  Whatever your business, not-for-profit or individual needs are we gather the best team to get the job done.

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If you have an audience and market to reach, we can make that happen. Creative design, words that work and smart behind the scenes stuff that cuts through the online noise. We’ll design your website and then build it. We’ll manage the content as well as all your hosting needs. We can handle your online advertising so you get noticed,
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