Are you a sole-trader and currently paying off your mortgage? If you are, you can use your GST to potentially save thousands on your current home or investment property loan.
How GST can help you offset your mortgage
If you work under an ABN that is registered for GST, the ATO will require you to complete your business activity statements (BAS) every quarter. As a business owner, you will be holding tax charged on your sales on behalf of the ATO until they are due.
If you keep this withheld GST in an offset account, you can potentially use it to offset your home loan and save on interest paid over the term of the loan. This means that instead of paying interest on the full outstanding loan balance, you will only pay interest on the balance of the outstanding loan, less the balance of the funds held in your offset account.
For example, let’s say you’ve taken out a mortgage for $500,000 at an interest rate of 3.90% over a 30-year loan term. You have an average of $50,000 in GST sitting in your offset account. This means you can save a total of $95,474.13 over the term of your loan and pay off the loan 3.5 years faster than initially anticipated.
Start paying your loan off faster and save more by utilising your GST
After all, it is just sitting in your account until it is due anyway. Use our home loan offset calculator below to calculate exactly how much you could be saving on your current home loan.
For more information on offset accounts please speak to our Pacific Finance Australia Brokers on 08 9321 2120. Alternatively you can also send us an email via [email protected]