Home loan offset and redraw facilities 'can save borrowers money'

Wednesday 24 February 2010

Article by Mozo

Mortgage holders can save money by investing their spare cash in a home loan offset or redraw facility it has been claimed.

Lesley Parker, a finance writer for the Sydney Morning Herald, noted that offset accounts can be used alongside home loans. The interest earned on the money in the offset account then either fully or partially offsets the interest being paid on the home loan, she said.

Meanwhile, she observed that redraw facilities allow borrowers to make extra repayments on their home loan. This excess money can then be withdrawn at a later date.

The commentator suggested that such facilities should be a consideration for people who decide to compare home loans, adding: "Once a feature of more expensive home loan packages, redraw facilities and mortgage offset accounts come attached to even some ‘basic’ home loan products these days."

Speaking recently to the Age, Frank Gelber, chief economist with business forecaster BIS Shrapnel, noted that as access to credit becomes more difficult and house prices rise, securing a home loan will only become more difficult.

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