Australians are making their home loans work harder as offset use increases

Commonwealth Bank Home Buying’s executive managing director, Dr Michael Baumann, said that while some of the growth in clearing accounts could be attributed to certain seasonality factors, it was also clear that customers are looking for ways better manage their finances in the current environment.

“An offset account is a transaction account linked to a qualifying home loan or investment property loan that can help borrowers pay less interest over the term of their loan and reduce the time they takes to pay off their mortgage,” he said. .

Borrowers with a $500,000 30-year home loan at an interest rate of 4.50% per annum who have an offsetting starting balance of $10,000 and add an additional $100 deposit to their offset each month , could save more than $60,000 over the life of their loan.

“At Commonwealth Bank, we offer eligible home loan customers the opportunity to take advantage of multiple free clearing accounts, which is perfect for people who like to give their money a specific task and then set it aside in different accounts for ensure it is only used for the purpose for which it was intended. Eligible customers can also take advantage of our withdrawal facility, which can help them pay less interest on their loan,” said the Dr Bauman.

Marisa Cregan is one such client who has taken advantage of the multiple clearing accounts offered by the bank. The mother-of-two uses 10 offset accounts linked to her Commonwealth Bank home loan.

Cregan says the 10 clearing accounts — all of which work together to offset the interest charged on her home loan — help her keep her money and keep track of her finances.

“We have an offset account for our savings, as well as one for our day-to-day expenses and another for our regular monthly expenses – like our mortgage payments, phone bills, childcare costs. he money my husband and I earn has a purpose and having multiple clearing accounts helps ensure that our money goes where we intended it to,” Ms Cregan said.

The recent growth in clearing accounts recorded by the CBA follows research earlier this year, when it was revealed that more than 90% of homeowners were actively preparing for impending rate increases on their mortgage.

Before the first rate hike in May this year, 92% of homeowners said they were “doing something to prepare for the impact of a rate hike on their mortgage”. Of these, 37% of homeowners said they were putting more money into their set-off or withdrawal facility tied to their home loan.

Dr Baumann said it is encouraging to see Australian homeowners taking proactive steps to strengthen their financial position, with rates expected to rise further in the coming months.

As well as using clearing accounts, Dr Baumann said the bank has a range of other flexible home loan tools and features that customers can take advantage of to help manage their mortgages.

“Clients can use our home loan repayment calculator to understand how any change in rates may impact their repayments. Plus, through NetBank and our industry-leading app, eligible customers with a variable rate loan can apply to split their home loan at any time. This can give them the certainty of a fixed rate and the flexibility and features of a variable rate, including access to multiple clearing accounts on qualifying home loans,” Dr. Baumann said.

“Another tool available to our customers is the Home Loan Modification Refunds tool. This is a new feature in the CommBank app that gives eligible customers with weekly or bi-weekly home loan repayments the control to synchronize their repayments with the frequency and day of the week they receive their paycheck.

For more information on ABC’s flexible home loan features and advice on how borrowers can manage their home loan in the current rate environment, visit:

What you need to know

Press releases are prepared without regard to the objectives, financial situation or needs of an individual reader. Readers should consider the relevance of their situation. Visit Important Information to access the Product Disclosure Statements or Terms and Conditions that are currently available electronically for Commonwealth Bank Group products, as well as the relevant Financial Services Guide. Target market determinations are available here. Loan applications are subject to credit approval. Interest rates are correct at the time of publication and are subject to change. Fees and charges may apply

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