Clients urged to check offset accounts are linked to mortgages

Offset accounts can be one of the most effective ways to reduce the cost of your mortgage — but only if they are properly linked to your loan. If not, you could be missing out on thousands of dollars in savings each year.

The Australian Securities and Investments Commission (ASIC) has recently launched an investigation into banks after reports that some borrowers’ offset accounts were not correctly connected to their mortgages. In some cases, customers weren’t receiving the interest reductions they were entitled to.

With more than $300 billion currently held in offset accounts across Australia, and more than half of mortgage holders relying on them, the potential impact is significant. ASIC has warned banks that refunds may be required where errors are found.

While the review may take up to a year, clients shouldn’t wait. Now is the time to take action:

• Check your loan statements to ensure your offset account is clearly linked.

• Contact your bank directly to confirm the account setup.

• Ask questions if something doesn’t look right – better to be safe than sorry.