What Is an Offset Account and How Does It Actually Save You Money?

What Is an Offset Account and How Does It Actually Save You Money

If you have a home loan or are thinking about getting one, you’ve probably heard about offset accounts.

But what are they really

And how do they help you save money

Here’s a simple explanation

An Offset Account Is Like a Smart Savings Account

An offset account looks and acts just like your everyday transaction account.

You can transfer money in and out use a debit card, set up direct debits, and get paid into it

But here’s the magic

Every dollar you keep in that account is counted as a dollar less on your home loan when it comes to calculating interest

An Example

Let’s say your home loan is $600,000

You have $30,000 sitting in your offset account

Your lender will only charge you interest on $570,000 instead of the full $600,000

That means less interest paid, more money saved and faster progress on your loan

Benefits of an Offset Account

  • You keep full access to your money at any time
  • You pay less interest over the life of the loan
  • You can still redraw if needed, but without needing to apply for extra lending
  • It gives you flexibility for emergencies, large bills, or investment opportunities

How Much Can You Really Save

Clients who use their offset account effectively can save thousands every year

For example, keeping $20,000 in your offset over five years could save you over $13,000 in interest, depending on your rate and loan balance

And unlike paying extra off your loan directly, your funds are still accessible

Who Should Consider One

Offset accounts are ideal for

  • Families or professionals who hold money in savings between pay cycles
  • Anyone building an emergency fund
  • Self-employed clients with tax savings or irregular income
  • Clients planning to invest later and want to keep funds available

Important Things to Watch

  • Some lenders charge extra fees for offset accounts
  • Some offer a partial offset only 40 to 50 per cent of your balance is counted
  • Not all fixed-rate loans allow offset

We’ll always help you compare true value not just features

Should You Add One or Review Yours

If you’re not using an offset account or if you’re not sure your current one is working effectively we can help

A quick review could unlock savings without changing your entire loan

Book a free clarity call with us today

We’ll show you whether an offset account fits your lifestyle your goals and your long term wellbeing

Because true wellbeing begins at home


Published: 1/9/2025
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