An increasingly common practice in many people’s daily budgeting is to ‘bucket’ money into different accounts for specific purposes. For example, a small family could have an account for groceries and transport costs, an account for utilities and other direct debit bills, an account for children’s expenses and a rainy day fund for the next family holiday.
This makes budgeting for regular expenses and tracking your spending easier, and for many it makes financial management that little bit more straightforward.
If you have savings sitting in the bank, another way to make this work for you is to select a loan with an offset account - that way, any funds you have are counting against the value of the loan and reducing your interest payments.
The challenge is that most loans with an offset facility only allow you to offset the content of one account; so if you segment your money to make it easier to manage, you need to select one account (typically the largest one) to be your offset.
In some cases, we’ve assisted BFD Finance clients to set up multiple variable loans to allow multiple offset accounts to be attached.
However, some lenders offer multi-offset accounts against the one loan. In this case, the funds across multiple accounts are totalled and that combined value is offset against the loan.
A true multi-offset structure isn’t something that’s offered by all major lenders. Macquarie Bank and Bankwest are two examples that actively offer multiple offset accounts attached to one loan, but if you’re interested in a multi-offset structure, there are ways to achieve this through careful planning and structuring of your finance.
Want to find out more? Contact the team at BFD Finance today and talk to one of our experts about the best solution for your situation.
Read more about offset accounts in our previous blog - Offset vs redraw: How should I structure my home loan?