Offset mortgages and intelligent finance loans were first introduced in 1997 and were an import from Australia. Simply put, an offset mortgage or intelligent finance loans is where you use your savings in a bank account to lower the interest you have to pay on your mortgage. It is easier to explain intelligent finance loans and offset mortgages by using an example.

Jack Jones has savings of $163;40,000 and a mortgage of $163;240,000. To save money Mr Jones opts for an offset mortgage. He therefore pays interest on $163;200,000 rather than $163;240,000. If Mr Jones wanted to finance $163;20,000 for his daughter’s wedding next year, he could ask when he set up his mortgage for a borrowing limit of $163;260,000. That’s $163;200,000 for the mortgage, $163;40,000 in savings + $163;20,000 for wedding. He would then have a debt of $163;260,000 however due to the offset feature of his mortgage and his $163;40,000 savings he would only pay interest on $163;220,000 rather than the $163;260,000 owed after the wedding. The main point to remember with offset mortgages is that you only pay interest on the money you actually owe. In Mr Jones’ case prior to borrowing for his daughter’s wedding this figure would have been $163;200,000 and after the wedding $163;220,000.

During the credit boom of the late nineties and early millennium, banks started to expand the offset principle to include credit cards and current accounts. The lenders who offer offset mortgages and intelligent finance loans usually offer two types of offset mortgages.

1) Current account mortgages – these give the borrower a single account with a large overdraft. The borrower’s savings, current accounts, credit cards and loans are all combined into this single account. The interest rate offered varies from lender to lender. This has the obvious advantage that there is only one payment for the borrower to worry about.

2) The second option available for borrowers is where the borrower keeps their separate accounts however they are linked together. As no interest is paid on savings as it is tied into the intelligent finance loans, the offset mortgage is extremely tax efficient and a great way to lower the amount of taxes that are owed.

As with the example above, both types of intelligent finance loans or offset mortgages have borrowing limits set when the intelligent finance loans set up. The borrower can then spend up to their limit without any penalties being imposed. If you are looking for finance speak to an expert adviser.

When you’re in the market for a home finance loan, you’re likely going to want to find the best interest rate and most flexible repayment terms that you can so that you’ll be able to get the most out of your money.

Finding the right home finance loan for you isn’t always easy, however… sometimes it requires you to put some time aside to search for a variety of different lenders and compare their loan offerings based upon interest rates, loan terms, closing costs, and several other factors.

Home Financing

Once you’ve decided that it’s time to buy a new house, you’re going to need to begin thinking about where to find the best home finance loan for your money. Ideally, you’ll be able to find a lender who isn’t going to charge you too much in interest or fees; unfortunately, there’s no guarantee that the loan you get will be the best loan that you’re eligible for. In order to maximize your chances of getting your best home finance loan, you’re going to need to shop around and compare different lenders.

Searching for Lenders

Begin your search for home finance loan lenders in your local area… check with banks, mortgage lenders, finance companies, and any other lenders that might offer loans for purchasing the house that you want. Request loan quotes that detail the interest rates, loan terms, and any fees associated with the loan, then go online and search for some online mortgage lenders so you can request quotes from them as well. Once you’ve compiled a number of quotes, you should begin sorting them in order of interest rates so that you’ll be able to begin the comparison from there.

Interest Rates

The interest that you’re charged on a home finance loan will likely vary from one lender to the next; though the base rates are set at the national level, the local economy and the lender itself can drastically alter the rates that you receive. Be wary of introductory rates, since the regular rate after the introductory period ends can be much higher than the rates offered by other lenders. Take the time to determine which lenders are offering you the best rates over time, and make note of whether those rates are fixed meaning they won’t change) or variable (meaning that they’ll change in reaction to national rate changes.

Loan Terms

Once you’ve decided which home finance loans offer you the best interest rates, you should begin looking at the other terms of the loan offers just to make sure that you’re not going to get into a loan agreement that isn’t in your best interest. Watch out for loans that require very specific payment arrangements or that have any terms that don’t seem right to you. You should also check to make sure whether or not there is a balloon payment (a payment of the remainder owed on the loan after regular payments have been made for a set number of years) due at the end of the loan.

Closing Costs and Fees

Another consideration that you should have for your home finance loan is the amount of closing costs and other fees that are associated with the loan. Most loans of this type will have some fees associated with them, though some lenders charge more fees than others. Take the time to make sure that you’re not paying more than you have to for your loan.