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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
5.69% p.a.
6.11% p.a.
$2,319
Principal & Interest
Variable
$0
$1,576
95%
5.80% p.a.
5.83% p.a.
$2,347
Principal & Interest
Variable
$0
$0
95%
5.84% p.a.
5.92% p.a.
$2,357
Principal & Interest
Variable
$0
$600
95%
5.88% p.a.
6.38% p.a.
$2,367
Principal & Interest
Variable
$350
$0
90%
5.90% p.a.
5.93% p.a.
$2,373
Principal & Interest
Variable
$0
$77
95%
5.94% p.a.
6.05% p.a.
$2,383
Principal & Interest
Variable
$0
$0
90%
5.95% p.a.
6.23% p.a.
$2,385
Principal & Interest
Variable
$299
$0
80%
5.98% p.a.
6.42% p.a.
$2,393
Principal & Interest
Variable
$350
$0
90%
5.99% p.a.
6.34% p.a.
$2,396
Principal & Interest
Variable
$395
$0
80%
6.01% p.a.
6.14% p.a.
$2,401
Principal & Interest
Variable
$10
$440
90%
6.04% p.a.
6.11% p.a.
$2,408
Principal & Interest
Variable
$0
$250
70%
6.08% p.a.
6.14% p.a.
$2,419
Principal & Interest
Variable
$0
$840
90%
6.14% p.a.
6.48% p.a.
$2,434
Principal & Interest
Variable
$395
$0
80%
6.38% p.a.
6.41% p.a.
$2,497
Principal & Interest
Variable
$0
$500
80%
6.14% p.a.
6.33% p.a.
$2,434
Principal & Interest
Variable
$199
$0
70%
6.29% p.a.
6.44% p.a.
$2,473
Principal & Interest
Variable
$0
$200
80%
6.94% p.a.
7.31% p.a.
$2,645
Principal & Interest
Variable
$395
$200
90%
7.24% p.a.
7.24% p.a.
$2,726
Principal & Interest
Variable
$0
$160
80%
7.44% p.a.
7.77% p.a.
$2,780
Principal & Interest
Variable
$395
$0
70%
6.99% p.a.
7.07% p.a.
$2,659
Principal & Interest
Variable
$8
$0
80%
More home loans
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

What is an offset account?

An offset account is essentially a transaction account linked to your home loan where the account’s balance ‘offsets’ the outstanding home loan debt, so you'll only be charged interest on the difference.

For example, say you had a loan of $610,000 and had $60,000 in a linked offset account, you would only be required to pay interest on the balance of $550,000.

As the balance in this offset account grows, the amount you save on interest also grows, which could save you money and cut the amount of time it takes you to pay off your loan.

To see just how much you could potentially save on interest costs with an offset account, check out Savings.com.au’s Mortgage Offset Repayment Calculator.

Fixed, variable rates and offset accounts

An offset account can be utilised across both fixed and variable-rate loans, generally at 100%. However, some lenders may cap the amount you can have in an offset account, have partial offsets (e.g. only 50% or 80% of the account balance offsetting the principal) or even limit offset accounts to packaged home loans. It therefore pays to do some groundwork by researching the market before you dive straight in.

Like a regular transaction account, your money is still accessible in the offset account. Although, if you were to make a withdrawal, you’ll have less money working to lower the interest charged on your home loan.


What are the potential disadvantages of an offset account?

There are some offset account disadvantages to be aware of. Mainly, home loans with offset accounts can have higher interest rates and fees than loans that don’t have them (more info on this in the next section).

Also, some offset accounts only partially offset the interest costs on funds in the account. For example, $50,000 in a 50% partial offset account would only offset the interest costs on $25,000 of the outstanding loan balance.   


Maximising your offset account

To reap the benefits of an offset account and accumulate the most savings, the amount of money deposited into the account must be consistently at a reasonable level - $100 isn’t going to cut it for you!

One of the ways that people manage to maximise the amount in their offset accounts is by putting all of their income into their offset account and using a credit card for their purchases and expenses made throughout the month. Critically, they then make a monthly lump sum payment from the offset account to their credit card provider to balance the credit card back to $0. Doing this avoids any interest charges and fees from the credit card itself.

As with many financial product features, there are often certain types of fees and premiums involved. While saving money long term is the focus here, you have to make sure you do the basic sums to ensure that the fees don’t end up costing more than the amount you save by reducing the interest bill on your home loan!

Some of the common fees and premiums involved with offset accounts can include:

  • Transaction fees.

  • Application/establishment fees.

  • Monthly account keeping fees.

  • Higher interest rates.

Case study: Offset account

Hoff Sette borrows $450,000 at a variable-rate of 3.00% p.a. paired with a 100% offset account. This loan bears no additional fees, yet has an interest rate premium of 0.10% compared to a loan without an offset account (at 2.90% p.a.). Hoff immediately deposits $25,000 into the offset account and keeps it there for the entire 30 years of the loan.

If we assume for simplicity’s sake that the interest rate stays at 3.00% p.a, the savings Hoff makes from the offset would be over $30,000 - much more than he would save by simply picking the 2.90% p.a. mortgage. This also helps him pay off the loan sooner, so it's a win-win for Hoff.

Frequently Asked Questions

There are pros and cons to both redraw facilities and offset accounts, so one is not necessarily better than the other. While an offset account often offers more accessibility and flexibility compared than a redraw facility, home loans that come with offset accounts generally have higher interest rates than loans that only have a redraw facility.
Unlike a savings account, funds in an offset account do not earn interest, so there are no interest earnings to tax. Instead, the money in an offset account reduces the interest costs on the loan.
Offset accounts are designed to have the same functionality as a savings account, giving you easy instant access to funds. Many offset accounts even come with a debit card to allow you to spend and withdraw cash from it.
Generally, you can only have one offset account linked to one loan. Some lenders may allow you to have multiple offset accounts linked to one loan, however the majority don't.
You can only put funds from your super into an offset account once you've reached the age at which you're legally allowed to access your super. If you've permanently retired, this may be between 55 to 60 (depending on when you were born) or after you've turned 65 (regardless of whether you've retired or not).
Your minimum monthly repayments will generally stay the same no matter how much money is in your offset account. Having money in an offset account just means more of your repayment amount will go towards paying down the loan principal and less towards interest. The money in an offset account is 'offset' against the balance of your home loan, so you only pay interest on the difference between the loan amount and the amount in your offset account. This can considerably reduce the amount of interest you need to pay, so your monthly mortgage repayments reduce the loan amount faster.