Understanding Offset Accounts – How They Can Save You Thousands

Offset accounts are one of the most powerful tools available to mortgage holders – but many people don’t fully understand how they work. If used correctly, they can shave years off your loan and save you thousands in interest.

What Is an Offset Account?

An offset account is a transaction account linked to your home loan. The money in this account “offsets” your loan balance, meaning you only pay interest on the difference.

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

Benefits of an Offset Account

• Lower interest payments
• Faster loan repayment
• Easy access to your money
  Unlike making extra repayments, funds in an offset account are still accessible if needed.

Tips to Maximise Your Offset Account

• Deposit your salary directly into the account.
• Use a credit card for monthly expenses (paid off in full) to keep money in the offset longer.
• Avoid unnecessary withdrawals.

Types of Offset Accounts

• 100% Offset: Every dollar offsets your loan.
• Partial Offset: Only a portion of your balance offsets the loan.

Speak to your broker to find out which type suits your loan and lifestyle.