Offset Account

An offset account holds money separately from a linked home loan. For a 100% offset, the eligible balance reduces the amount used to calculate loan interest.

Worked example for one day

Suppose a loan is $700,000 and its linked 100% offset holds $80,000. The interest-bearing amount is $620,000. At an illustrative 6.2% annual rate using 365 days, the offset reduces that day's interest by about $13.59: $80,000 x 0.062 / 365.

This is a one-day illustration before fees. Multiplying it by 30 years does not produce a reliable lifetime saving: repayments, balances, rates and the eventual payoff date change the calculation.

Costs and account linking

ASIC Moneysmart notes that offset features may carry higher rates or fees. Check the account is actually linked, including after a loan change. Use the Offset Account Break-even Calculator to compare the stated cost assumptions and estimated interest reduction.

A redraw facility accesses extra payments already made into the loan. Its available redraw balance should not be treated as a separate offset balance or subtracted from the debt twice.

Sources and limitations

ASIC Moneysmart: Mortgage offset accounts, checked 10 September 2026. Last updated: 10 September 2026.

General information and illustrative estimates only, not financial, credit or tax advice. Product rules may differ. This page does not determine tax treatment; speak with a registered tax agent about your circumstances.