Hi Nicole, I have managed to refinance my mortgage to a 1.85 per cent interest rate . In hindsight, I realise I should have gone with a different lender with a lower comparison rate that also assured me they are an authorised deposit-taking institution. Now I’m looking at credit cards to putmy expenses onto the card, and keep my earnings in a mortgage offset account. However, I do not know which is a better strategy.
The interest saving is identical to paying money directly into a mortgage, but the move is safer, provided the lender is an authorised deposit-taking institution, and thus your money is covered by the federal government’s deposit guarantee, and ensures you will retain access to it. You need to be disciplined with your spending and repayments, and make sure you never carry over a credit card balance from month to month and incur interest.
While the comparison rate is useful as a like-for-like observation tool, as opposed to the headline rate, it has some shortcomings. It was created to capture upfront and ongoing fees on a mortgage, which have the potential to dramatically increase the effective interest rate.