If you like the idea of a Line of Credit, but feel it is too easy to withdraw your funds, then this is the loan for you. You'll have two accounts – Home Loan account – 100% offset savings account. The offset savings account is linked to your home loan account. No interest is paid to the offset savings account but instead the balance of your offset savings account is deducted from your home loan account before the interest on your home loan is calculated. Therefore less interest is charged to your loan.
It works like this (example):
You would only be charged interest on the difference i.e. $190,000. This means you’ll pay less interest and reduce your initial loan term.
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