Offset account

An offset account is a transaction or savings account linked to a home loan. The balance in the offset account is subtracted from the outstanding loan balance when calculating interest charges. You are effectively “offsetting” the loan balance with your savings.

Example

If you have a $500,000 loan and $50,000 in your offset account, you only pay interest on $450,000.

Benefits

• Reduces the interest charged on your loan without locking away funds
• Savings remain accessible — you can withdraw from the offset at any time
• Can significantly reduce total interest paid and shorten loan term over time

Offset vs extra repayments

• Offset account: Funds remain accessible; interest savings apply while funds are in the account
• Extra repayments: Funds reduce the loan balance permanently (subject to redraw availability)

Is it worth the fee?

Offset products typically cost more in annual fees than a basic variable loan. Use the Mortgage Offset Savings Calculator to see whether the interest saving from your expected average balance outweighs the extra annual fee over your loan term.