What is an Offset Account, and should you have one?

An offset account is a bank account linked to your loan. You can deposit your pay and savings in the account, and that amount is offset against your loan amount owing.


If your loan is $250,000, and you have $30,000 is your offset account, you will only be charged interest on a loan amount of $220,000. Hence, having an offset account reduces your overall interest repayments, and could possible help you pay off your loan sooner, or ease some financial stress.


However, you should consider the following when deciding to get an offset account:

  • Is you loan eligible for an offset account? It's not available with all loan products, talk to your lender or broker

  • Are there any fees that will negate the benefits? If there are fees, you need to weigh up how much you'll be spending with how much you'll save. Naturally, if you have more money in your offset, it will most likely be worth it.

  • Is 100% of the balance offset against the loan? This will effect how much you're saving on interest.

  • What is the difference between an offset and a redraw facility?

  • If an emergency occurs, you need to know how easily you can access the money you put in the offset compared to if you had a redraw facility.


Maybe an offset account isn't for you, but we believe knowledge is power, particularly in finance. It pays to be aware of all the options open to you and to ask your broker about different ways to structure your loan.


Email or give us a call on 02 9299 1144 to talk to an expert today.