Mortgage Glossary

What is Offset Account?

A transaction account linked to your home loan, where the balance reduces the interest you're charged.

Interest on your home loan is calculated on the loan balance minus whatever sits in your linked offset account. So if you have a $500,000 loan and $30,000 in your offset account, you're only charged interest as if the loan were $470,000. Unlike extra repayments, money in an offset account stays accessible, which makes it a popular way to reduce interest while keeping funds liquid.