The best mortgage suiting your personal needs will have features that make the deal an attractive one. There are several separate features available if looking to reduce loan interest or seeking a discounted interest rate. You may look for a loan to combine all your accounts into one or seek making additional repayments to clear your home loan quickly. You can also link a savings account to your best mortgage choice.
Perhaps the best mortgage advice is to set up an offset account to accompany your home loan. Although no interest is ever paid on the offset account, its balance is deducted from the total loan amount therefore reducing the amount of interest that you have to pay on the loan. There are several advantages to this including:
• A savings account would have taxable interest. But, an offset account balance is used to reduce loan interest so no tax is payable. In fact, your tax bill is effectively reduced
• The rate of interest applied to the offset account is the same as the loan account. This is, obviously, a much higher rate than you would get on a normal savings account.
You may, however, find higher monthly fees associated with an offset account and required to maintain a minimum balance.
Get it All in One Account
Another feature that is available is an all in one account that acts as your best mortgage loan with both a savings and a cheque account. The central account is your mortgage where you deposit your salary and other payments. With extra money in your account, the principal owed is reduced and so is the interest. Once the monthly repayment has been deducted from the account, funds left can be used to pay other monthly expenses. Most of these accounts have a credit card associated with it allowing the balance to be accessed from any ATM machine making any other accounts not necessary for personal banking.
Common Loan Features to Consider
Here are some of the most common loan features available to suit your personal needs:
• More Repayments – Making more than the required monthly repayment is a method to pay the loan off more quickly, reducing the interest on the loan. Say, for example, you are making monthly repayments on a $300,000 loan of $2,120. By making an extra $380 per month repayment, you would be reducing the loan debt quicker with a $2,500 per month repayment without any penalty fee.
• Direct Salary Deposit – Is a great idea for people who are not disciplined money managers since your salary goes automatically into your mortgage account.
• Offset Account – Is a savings account accompanying your home loan. The offset balance is deducted from the entire loan amount when charging daily interest. Therefore, a consumer with a $200,000 loan that has a $10,000 offset account will be charged interest on $190,000 only.
• Loan Portability – Allows you to take a loan to another property when you move.
Consult with professional home loan consultant for all the variety of loan features available.
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