Common questions
What is a mortgage offset account?
A mortgage offset account is a transaction account linked to your home loan. The balance in this account is "offset" against your loan principal, meaning you only pay interest on the net amount (loan principal minus offset balance).
How does an offset account save interest?
By reducing the loan principal on which interest is calculated, an offset account directly lowers the amount of interest you pay. For example, if you have a $500,000 loan and $50,000 in your offset account, you'll only be charged interest on $450,000.
Can an offset account help pay off my loan faster?
Yes. If you maintain your regular mortgage repayments (which are typically calculated on the full loan amount), the interest savings from the offset account mean more of your repayment goes towards reducing the principal. This helps you pay off the loan sooner.
What should I consider when using an offset account?
There are three things to weigh up.
- Fees: consider any fees associated with the offset account or the loan package.
- Balance: the effectiveness of an offset account depends on maintaining a consistent balance in it.
- Net benefit: ensure the benefits outweigh any potential costs or complexities for your situation.
This calculator gives an estimate only. Your own savings depend on the balance you keep in the offset account and on any fees attached to the account or the loan package.