What Is an Offset Account, and Is It Worth Having?

An offset account is a savings or transaction account linked to your home loan. The balance in it "offsets" your loan balance when interest is calculated so the more you keep in it, the less interest you pay, without actually paying down the loan itself.

How it works, with a simple example

If you have a $500,000 loan and $50,000 sitting in a linked offset account, you're only charged interest on $450,000. Your repayment amount doesn't change, but more of each repayment goes toward the principal instead of interest meaning you pay the loan off faster over time.

Why people choose offset over just paying down the loan directly

The interest savings are functionally similar to making extra repayments, but an offset account keeps your money accessible. You're not locking funds into the loan and needing to redraw them the money is sitting in what functions like a normal transaction account, available for emergencies, opportunities, or everyday spending, while still reducing your interest bill.

Where it matters most

Offset accounts tend to deliver the most value for borrowers who keep a meaningful, relatively stable balance in the account savings for a future goal, a buffer fund, or even salary sitting there before it's spent through the month. The larger and more consistent the balance, the more interest you save.

Things worth checking before you assume you have one

Not every loan includes offset access, and not every "offset" is a full 100% offset some products offer partial offset, or only on certain loan types. Fixed-rate loans in particular often restrict or exclude offset access, which is one of the trade-offs worth weighing when comparing fixed vs variable structures. It's also worth checking whether the account comes with ongoing fees that could offset (no pun intended) some of the benefit.

A quick way to see the impact

Our repayment calculator shows how extra funds reduce your interest and loan term a useful way to see roughly what a given offset balance could be worth to you before you structure a loan around it.