What is an offset account?
An offset account is a transaction account linked to your home loan. Your balance reduces the loan amount you pay interest on.
An offset account is a regular transaction account linked to your home loan. Whatever balance you keep in it reduces the loan amount that interest is calculated on. If you owe $500,000 and have $50,000 in your offset, you only pay interest on $450,000.
It works exactly like making extra repayments, but you can still access the money whenever you want. There's no tax on the interest you 'save' either — unlike earning interest in a savings account.
Key facts
- •Reduces the loan balance that interest is charged on
- •Money stays accessible — you can withdraw anytime
- •Interest saved is not taxable (unlike savings account interest)
- •100% offset means every dollar reduces your interest; some accounts are partial offset
- •Usually available on variable rate loans; less common on fixed
Try the calculator
Offset CalculatorFrequently asked questions
Is an offset account better than a savings account?
Usually yes, if you have a mortgage. A savings account earns interest you pay tax on. An offset saves you interest at your mortgage rate, tax-free. At a 6% mortgage rate in a 37% tax bracket, offset wins easily.
Can I have more than one offset account?
Some lenders allow multiple offset accounts linked to the same loan. This can help with budgeting — one for bills, one for savings — while all balances reduce your interest.
General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.