Smart ways to refinance and add an offset account

Why refinance to add features like an offset account?

If you're a homeowner in Croydon, you might be paying your mortgage each month without realising you're missing out on valuable features that could save you thousands of dollars. One of the most popular reasons people choose to refinance their home loan is to access an offset account - a feature that can significantly reduce the amount of interest you pay over the life of your loan.

An offset account is a transaction account linked to your mortgage. The balance in this account is offset against your loan amount, meaning you only pay interest on the difference. For example, if you have a home loan of $500,000 and $30,000 in your offset account, you'll only pay interest on $470,000. The savings can add up quickly, especially if you maintain a healthy balance in your offset account.

When should you consider refinancing for an offset account?

There are several situations where refinancing to add an offset account makes sense:

• You've accumulated savings but they're sitting in a regular savings account earning minimal interest
• Your fixed rate period ending and you're looking to switch to a variable interest rate with more features
• You're coming off fixed rate and want to take advantage of what's currently available in the market
• You're stuck on high rate without the features you need to improve cashflow
• You've never had a loan review and want to see what you might be missing

Understanding the refinance process

The refinance application doesn't have to be complicated. When you work with Craft Financial in Croydon, we'll guide you through each step of the mortgage refinancing journey. Here's what typically happens:

1. Home loan health check: We review your current loan amount, interest rate, and features to identify opportunities
2. Property valuation: We arrange a valuation to understand your current equity position
3. Compare refinance rates: We search across multiple lenders to find options that include offset accounts
4. Application submission: We prepare and submit your refinance application
5. Settlement: Your new loan is established with the features you need

What other features should you consider?

While an offset account is a powerful tool, refinancing opens the door to other beneficial features you might want to explore:

Redraw facilities: A refinance redraw option lets you access extra repayments you've made, providing flexibility for unexpected expenses or opportunities.

Rate options: You might want to switch to variable from fixed, or potentially access a better interest rate by moving from a variable to fixed loan to lock in rate certainty.

Debt consolidation: If you have personal loans or credit cards with high interest rates, you could consolidate into mortgage to reduce loan costs and improve your monthly cashflow.

The financial impact of adding an offset account

Let's look at a real-world example. Say you have a mortgage of $600,000 at a variable interest rate of 6.5% per annum. If you maintain an average balance of $40,000 in your offset account, you could save around $2,600 per year in interest charges. Over the life of a 30-year loan, that's potentially tens of thousands of dollars - money that stays in your pocket instead of going to the lender.

These savings become even more significant when you're paying too much interest on an older loan product. Many Croydon residents we speak with are surprised to learn how much they could save money refinancing to a loan with modern features and current refinance rates.

Additional reasons to refinance your home loan

Beyond adding an offset account, there are other compelling reasons to move mortgage providers:

• Access equity: Release equity to buy the next property or access equity for investment purposes
• Lower interest rate: Potentially access a lower interest rate and save on interest over the loan term
• Fixed rate expiry: If you're coming off a fixed rate period, it's the perfect time to reassess your options
• Cash out refinance: Unlock equity for renovations, education, or other major expenses
• Improved loan structure: Switch between fixed interest rate and variable interest rate products to suit your current circumstances

Is now the right time to refinance?

Timing is important when considering when to refinance. Some key indicators that it's time for a loan health check include:

• Your fixed rate period has ended or is ending soon
• You haven't reviewed your loan in more than two years
• You've built up significant equity in your property
• Your financial situation has improved since you took out your original loan
• You're using personal loans or credit cards for expenses you could fund through your mortgage
• You want access to features like offset accounts that your current loan doesn't offer

Working with a Croydon mortgage broker

Refinancing your home loan involves comparing multiple lenders, understanding different loan structures, and submitting a comprehensive application. At Craft Financial, we handle the heavy lifting for you. We'll conduct a thorough comparison of current refinance rates, help you understand which features will benefit you most, and manage the entire refinance process from start to finish.

Our team understands the Croydon property market and works with a wide panel of lenders to find solutions tailored to your situation. Whether you're looking to refinance to lower rate, add an offset account, or access equity in your property, we'll present you with options that align with your financial goals.

Getting started with your refinance

The first step is understanding why refinance makes sense for your situation. An offset account can deliver substantial savings, but it's just one piece of the puzzle. You might also benefit from accessing a lower interest rate, improving your loan features, or releasing equity in your property for other purposes.

Don't wait until you're stuck on a high rate without the features you need. A proactive approach to managing your home loan can save you thousands of dollars and provide the financial flexibility you need for whatever life brings.

If you're a Croydon resident wondering whether refinancing could work for you, or if you'd like to explore how an offset account could reduce your interest payments, we're here to help. Call one of our team or book an appointment at a time that works for you. Let's review your current situation and explore the opportunities available through refinancing.