What is Offset Account?
Quick definition
An offset account is a transaction account linked to a home loan that reduces interest calculations on the loan balance.
Home loansGeneral
Overview
Offset accounts reduce interest by offsetting eligible account balances against your home loan balance for interest calculations.
If your loan is $600,000 and offset balance is $40,000, interest may be calculated as if balance were $560,000 (subject to product terms).
Offset features vary: full vs partial offset, package fees, and operational rules can materially affect outcomes.
Formula
Interest assessed on approximately max(Loan Balance − Offset Balance, 0)Why it matters
- Can reduce interest while keeping cash accessible.
- May provide flexibility versus locking funds into extra repayments.
- Product fees and feature rules can change net benefit.