Linked accounts merit fairer deal
offset loans pay interest on their home loan balance, minus the money they have in their everyday and savings accounts.
While that sounds great, offset home loans are complicated, floating rate loans with interest rates at the higher end of the scale, and care has to be taken with them not to end up actually paying more in interest over the term of a loan.
Still, they can be used to good effect. I know of one family with wealthy parents who let them offset their home loan against their savings.
Later this year, Commerce and Consumer Affairs Minister David Clark hopes to see new laws requiring banks, insurers and other financial institutions to have fair conduct plans pass into law.
In my book, fair means either routinely offsetting for home loan customers, or paying them higher interest than savers with no home loans, or giving up the right to use money in borrowers’ everyday and savings accounts as security against their home loans.
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