What is an offset account?
An offset account can be a useful tool to help you to potentially reduce the amount of interest you pay on a loan. This calculator can help you to see how much sooner you could pay off your loan by using your offset account and how much you could save in interest.
Your broker can help you understand how to best use your offset account, or find an appropriate loan with an offset account for you.
How does a mortgage offset account work?
An offset account is a transaction account that is linked to your home loan. The balance in this account can be used to offset your loan balance, which reduces the interest you pay, but you can still access funds in the account like your usual transaction account.
For example, if you owed $600,000 on your mortgage and had $40,000 in your offset account, interest would be charged on $560,000.
What’s the difference between an offset account and a redraw facility?
An offset account is a transaction account that you can access for day-to-day expenses. A redraw facility is a facility within your loan account that enables you to make extra payments, however is not as easily accessible. Both these features can enable you to reduce the amount of interest you pay.
Can I have multiple offset accounts linked to one home loan?
Some lenders do allow multiple offset accounts linked to one home loan. Check with your lender if this is available or consider refinancing to one that offers this arrangement.
Is an offset account worth it for my home loan?
Whether an offset account is worthwhile for you comes down to your personal circumstances. It can be an effective tool to reduce total interest paid if it is used, meaning there is enough money in there to offset any fees that may be charged for having the account available. Also consider the interest rate attached to the loan and whether this impacts the potential savings compared to other options.
Making additional repayments toward your home loan can help you to save money in interest. Find out how much of a difference lump sum repayments could make.
How much could you save by making additional repayments toward your mortgage?
No two loans are the same and there are a number of costs to weigh up. Compare two side by side to see the difference.
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Our Customer Care team is available weekdays, 8:30 AM to 5:30 PM.
With over 650 mortgage brokers throughout Australia, we’ve likely got someone just around the corner from you.
Looking for a career change? We’re committed to working with you to achieve your goals.
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