What is an offset account?

Tuesday 11 October 22

What is an offset account?

There’s been a lot of discussion lately around offset accounts and how they can shorten the length of your home loan and save you money.

How does this work?

An offset account is a transaction account that is attached to your home loan.

You can use it the same way you would use your everyday banking account, as you’ll receive a debit card and your salary can be deposited directly into it.

So what’s so special about it?

Offset accounts can dramatically change the amount of interest you are paying on your home loan. Everyday, the amount you have in your offset account will be compared to the balance of your mortgage and this will determine how much of your loan you’ll pay interest on.

For example, if you have a $300,000 home loan and $10,000 in your offset account, you’ll only be charged interest on $290,000.

Tell me more…

Because home loan rates tend to be higher than what is offered for a savings account, offset accounts can be a great alternative for those wanting their money to work harder for them.

It’s always advisable to speak to a mortgage broker on whether this is an appropriate option for you and I am happy to have a chat with you about your options.

Here's a fun video Beth made an an attempt to better explain the concept...

Back to Learning Centre

Grace Loans and Bethany Massey are Authorised Credit Representatives of BLSSA Pty Ltd, Australian Credit Licence number 391237. Authorised Credit Representative nos. GL: 523940, Bethany: 513202. Content of site may not be fully up to date as lenders are constantly changing their loans and policies. Any advice provided on this website is of a general nature not taking into account your personal objectives and situation. Such matters are important to consider prior to taking any action. Please make an appointment to discuss your specific situation so that appropriate advice may be given with regard to suitable products using current information.