| If you go in search of a mortgage calculator on the | | | | worked was provided and she decided to compare a |
| Internet you will find an abundance of them. The trick is | | | | standard mortgage with one that also offered a 100% |
| to find a mortgage calculator that provides you not | | | | offset. |
| only with simple repayment calculations but also allows | | | | Using the mortgage calculator she entered the loan |
| you to compare repayments on different mortgages. | | | | amount ($250,000) and interest rates – 7.95% p.a. |
| While some sites have just one basic repayment | | | | for both mortgages. She then included an amount of |
| mortgage calculator, others offer a range of them. | | | | $20,000 which she had available to put into in an |
| More importantly a few sites provide some education | | | | “offset account”. At the time the $20,000 was in |
| and helpful hints along the way. | | | | a savings account with her Credit Union earning her |
| When looking for a mortgage calculator check the site | | | | around 3.5% p.a. and the interest she earned on it was |
| you visit to see what else it offers with the mortgage | | | | taxable as income. Under the proposed 100% offset |
| calculator. Most sites simply provide a list of the | | | | mortgage, by shifting the $20,000 to an offset account |
| mortgage calculators offered and leave you to guess | | | | she could obtain the same interest rate of 7.95% p.a. |
| which might be the most appropriate and then to input | | | | that she was paying on her mortgage, on the |
| the data required to calculate repayments. Better sites | | | | deposited funds. Furthermore because of tax |
| will provide you with a brief explanation of the | | | | concessions available with this sort of structure she |
| functions of each mortgage calculator and may | | | | was not taxed on the interest. While the interest rates |
| prompt you with some questions, the answers to | | | | on both loans were the same, the mortgage calculator |
| which can have a significant impact on your monthly | | | | clearly demonstrated the much better cash flow |
| mortgage repayments. As an example a client of mine | | | | position that resulted with the 100% offset mortgage |
| recently checked out a number of sites and found one | | | | facility. |
| or two that actually provided detailed explanations of | | | | Her standard interest only monthly repayment on |
| the different data sought and the reasons why it was | | | | $250,000 @ 7.95% was $1656.25 or $19,875 per |
| required. The search for a mortgage calculator not | | | | annum. |
| only resulted in her learning quite a lot about different | | | | Put simply; under a 100% offset account the monthly |
| mortgage terms but also gave her a clearer idea on | | | | interest is calculated against the outstanding loan |
| how she would need to manage her cash flow if she | | | | balance under the mortgage less the amount |
| were to proceed with her planned property purchase. | | | | deposited in the offset account. In this example |
| One site she visited provided her with the standard | | | | $250,000 less $20,000 = $230,000 @ 7.95% = |
| repayment mortgage calculator as well as a | | | | $1523.75 per month or $18,285 p.a. |
| comparison mortgage calculator, which enabled her to | | | | Monthly saving under the offset loan = $132.25 or |
| check the rates of her preferred lender with those of | | | | $1590 per annum. |
| another one that had been recommended to her. | | | | My client paid $18,285 annual interest on her loan of |
| Another mortgage calculator prompted her to consider | | | | $250,000, which reflected an interest rate of 7.32% p.a. |
| a 100% offset loan. She had not heard of 100% offset | | | | - quite a significant improvement on the standard rate |
| loans but a brief explanation of the product and how it | | | | of 7.95% p.a. |