What is an Offset Account?
An offset account is a transaction account linked to your homeloan. The balance in the offset reduces the amount of a loan on which interest is charged.
For example, if someone owes $500,000 on a mortgage and have $50,000 in an offset account, they will only be charged interest on $450,000. The more money in your offset, the less interest you pay. Offset accounts are common in Australia and can save thousands in interest over the life of a loan. They’re especially useful for investors who want flexibility without paying down their loan directly, as funds can be withdrawn at any time. They have also become popular in the last decade with regular home owners for their financial planning and budgeting benefits.