Don't Just Save —
Excel Your Interest
An Offset Account is a transaction account linked directly to your home loan. Every dollar sitting in this account "offsets" the balance of your loan — meaning you only pay interest on the difference.
Why let your money sit idle when it could be fighting your mortgage?
Every dollar in your offset account is working for you 24 hours a day, 365 days a year — reducing the interest charged on your home loan.
Slash interest costs
Every dollar in your offset reduces the interest you owe daily — calculated on the net balance, not the full loan amount.
Tax-effective growth
Unlike savings interest (which is taxable), interest saved is money kept. There's no tax on the savings — just more money in your pocket.
Full liquidity
Need your cash? Use it. Your money isn't locked away — it's available via ATM, transfer, or debit card just like a regular transaction account.
Shorten your loan
By paying less interest, more of your monthly payment goes toward the principal, helping you hit 'Debt-Free Day' years earlier.
Step-by-step: how an offset account loan works
Using a $500,000 home loan at 6% p.a. as an example — here is exactly what happens at each stage.
Link the offset
Open an offset transaction account with your lender (e.g., CommBank, NAB, Westpac, ING) and link it to your home loan.
Deposit funds
Park money from savings, salary, or bonuses in the offset account. The more you keep in there, the more you save.
Interest magic
Interest is calculated on your loan balance minus the offset balance. E.g., $500k loan − $100k offset = interest on $400k only.
Daily calculation
Most lenders use a 365-day year. Daily interest = (Net balance × Rate) ÷ 365. Your salary deposit works for you every single day.
Full access maintained
Use the offset like a regular account — pay bills, withdraw, transfer. You earn no interest on the offset itself, but save significantly on loan interest.
Repayments continue
Continue minimum P&I repayments on the full loan principal. Extra offset funds accelerate payoff indirectly — no extra effort required.
See the difference — $50,000 offset on a $500,000 loan
Without offset
$500,000
You pay interest on the full $500,000 loan balance.
With $50,000 offset
$450,000
You only pay interest on $450,000. Same monthly payment — but much more goes toward owning your home.
Who qualifies for an offset account loan?
An offset account is perfect for the disciplined saver. If you keep a healthy buffer in your account for emergencies or future goals, an offset ensures that money works for you every day.
Is an offset account right for you?
An offset account is perfect if you tend to keep a healthy buffer in your bank account for emergencies or future goals. Every dollar sitting there is saving you mortgage interest — without sacrificing access to your cash.
Calculate your offset savings potential
Stop wondering and start saving. Use the interactive calculator to see exactly how many years you could shave off your mortgage and how much interest you save.
Offset savings calculator
Your offset impact
✓ Your $50,000 offset saves you $8 every single day.
The tax trap & redraw difference
The most important part of choosing an offset account is understanding the tax implications — especially if you think you might ever turn your home into an investment property.
Feature
Offset account
Redraw facility
The redraw risk
If you pay extra money into your loan via redraw and then withdraw it later to buy a car or go on a holiday, the ATO may no longer consider that portion of the loan tax-deductible if the house becomes an investment property.
The offset solution
Offset keeps your money separate from the loan. You can withdraw $20,000 for a holiday, and it does not "contaminate" the original loan balance — preserving all future tax deductions.
The golden rule
If there is even a 10% chance you will rent out your home in the future, use an offset account — not redraw. It protects your future tax deductions and gives you total flexibility.
Common questions
Everything homeowners and investors ask about offset accounts in Australia.