Parents turn to offset accounts to pay for school fees.
With the school year kicking off, many parents are scratching around to put their kids school fees together, especially those paying for big ticket private schools. According to The Telegraph, some parents are cleverly putting their savings into offset accounts, reducing the interest on their home loans and then using those funds to pay for school fees at the start of the year.
While some people may choose to keep their savings in a high interest savings account, they may see themselves having to pay tax on interest earned at the end of the year. Where those with a home loan can take advantage of extra funds they have to offset the interest on their home loan, reducing the cost of repayments and shortening the life span of their home loan. "Mortgage offsets are fantastic. If it's money you know you are going to have to access in the next 12 months or so, it's the best thing you can do," says AMP financial planner Tony Rigby.
Anyone who thinks this could be a wise plan for their budget should compare home loans to find the best low rate home loan with the added benefits of an offset account and redraw facilities.
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