Make your mortgage your best investment

Weather central banks are talking interest rate cuts or hikes, it’s still vital to keep your home finances in order ; no matter what stage of life you’re in. One of the most common questions I hear at the school pick‑up or weekend BBQ is: “Am I getting a good deal on my mortgage?”

I’ve never written a home loan myself, but after 20 years in banking & finance, I’ve seen plenty. And I know that when you’re raising a young family, the financial pressure can feel relentless ; groceries, utilities, insurance, kids’ presents, holidays, education costs and of course, mortgage repayments.

Offset Accounts: An Underrated Wealth Tool

Most people are familiar with the term offset account. This is where you park your savings to reduce the interest charged on your home loan. When people ask me, “What can we invest in to get ahead?”, myanswer is often: your mortgage.

Here’s why:

Offsetting interest on your home loan (not an investment loan) reduces non‑tax‑deductible interest.
You don’t need to earn the dollar, pay tax on it, and then use it to reduce debt, the saving is immediate and tax‑free.
If your home loan rate is 6% and your marginal tax rate is 46.5%, you’d need to earn close to 10% per annum consistently just to match the benefit of keeping that money in your offset account — and that’s before factoring in investment risk.

For young clients, my mantra is: mortgage first, build equity, then invest.

Structuring Your Finances for Maximum Impact

Your personal capital structure can save you years in repayments if you get it right. A few strategies I’ve seen work well:

Park all income and savings in your offset account : both salaries, bonuses, and any surplus cash.
Use a credit card strategically :
- Choose one with a decent limit and a long interest‑free period (55 days is common).
- Enable the auto‑pay feature so the card only draws the exact amount due at the end of the interest‑free period, straight from your offset account.
- This means your money works harder for longer, reducing your loan interest while you live on the bank’s money interest‑free.
Set a sensible limit : ideally 2–3 months’ worth of living expenses, and always clear the balance before interest kicks in.

The Golden Rule

This strategy only works if you’re disciplined. Always have the funds ready to clear the card before the interest‑free period ends. Done right, you’ll save thousands in interest and shave years off your mortgage.

Bottom line: In a world where rates may move up or down and this can have a big impact on disposable incomes, the smartest move is to control what you can — and for most households, that means making your mortgage work as hard as possible for you.

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