Recently, I received an important notice from ANZ regarding home loan offset accounts. While this may not affect my personal situation, I wanted to highlight the financial impact of their statement: “Allow up to 5 days for your new account to be linked to your loan.” This home loan offset account delay could cost you more than you might expect.
Understanding Home Loan Offset Account Delays
When switching to ANZ or setting up a new home loan offset account, the 5-day linking period means your offset benefits aren’t working during this time. Let’s break down what this actually costs in real terms.
The Real Cost of Home Loan Offset Account Delays
Imagine you have a typical scenario with a $400,000 mortgage and $100,000 sitting in your home loan offset account with an interest rate of 6%.
| Annual interest saved with offset: | 0.06 × $100,000 = $6,000 |
| Daily interest saved with offset: | $6,000 ÷ 365 = $16.40 |
| 5 days of lost interest savings: | 5 × $16.40 = $82.20 |
That’s an additional cost equivalent to adding 2 basis points to your total interest for the year. While $82.20 might not seem significant at first glance, it’s money that could be better kept in your pocket.
What Home Loan Offset Account Holders Should Do
If you’re planning to switch banks or set up a new home loan offset account, consider timing your move strategically. You might want to transfer your funds gradually or wait until after any major expenses to minimize the impact of these delay periods.
“The devil is in the details when it comes to home loan offset accounts. Always read the fine print about linking times and factor this into your financial planning.”
Making the Most of Your Home Loan Offset Account
Despite these temporary linking delays, home loan offset accounts remain one of the most effective ways to reduce mortgage interest. According to the Australian Securities and Investments Commission, offset accounts can save tens of thousands of dollars over the life of a loan.
For more information about optimizing your mortgage strategy, the Mortgage Choice guide to offset accounts provides excellent tips for both new and experienced borrowers.
Home Loan Offset Account Calculator
Want to calculate your own potential savings? Try this simple formula:
Annual Savings = Loan Interest Rate × Offset Balance Daily Savings = Annual Savings ÷ 365
Have you experienced delays with your home loan offset account? Share your experiences in the comments below!