Fixedoffset

Fixed rate home loans with 100% offset accounts

The secret to minimising interest on a fixed rate home loan.

Not all fixed rate home loans are lacking in features.

Today, many lenders offer the ability for fixed rate borrowers to make additional repayments, use redraw facilities and take advantage of 100% offset and partial offset accounts.

An offset account works like a regular transaction account. You can have your salary deposited into it, along with any other money you receive. You’ll also receive a debit card which you can use to access the funds. The difference is that funds in the account offset the principal loan amount, thereby reducing your interest repayments. For example, if your home loan balance is $500,000, but you have $20,000 in an offset account, interest will only be calculated in $480,000.

Compare home loans

Rates last updated October 19th, 2018
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Loan purpose
Offset account
Loan type
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.87%
3.91%
$0
$10 monthly ($120 p.a.)
90%
Get Velocity Frequent Flyer Points at settlement, monthly and every three years, plus the option to make up to $10,000 a year in extra repayments.
3.49%
4.57%
$0
$395 p.a.
90%
Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
3.59%
3.58%
$0
$0 p.a.
80%
Apply online and get fast approval for this fixed rate, low-fee loan with redraw facilities. Add a 100% offset account for a small fee.
3.79%
4.75%
$375
$15 monthly ($180 p.a.)
95%
Take advantage of a 100% offset account and additional repayment options.
3.79%
5.07%
$0
$395 p.a.
95%
Get discounts on a range of Commonwealth Bank products and enjoy the option of fee-free extra repayments during the fixed term. $2,000 cashback offer for eligible refinancers.
3.64%
3.59%
$0
$0 p.a.
80%
Fast, 100% online application process. Very limited fees. Optional offset account (with fee).
3.84%
4.18%
$0
$395 p.a.
80%
Lock in a competitive rate for owner occupiers for two years. Extra repayments up to $30,000 over the life of the fixed period can be made.
3.89%
4.69%
$375
$15 monthly ($180 p.a.)
95%
Lock in a rate for two years and enjoy a full offset account and redraw facility.
3.89%
5.01%
$0
$395 p.a.
95%
Lock in a discounted rate for 3 years and have the option for interest only repayments. $2,000 cashback offer for eligible refinancers.
3.99%
4.23%
$0
$395 p.a.
80%
3.69%
4.54%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
5.35%
5.57%
$375
$15 monthly ($180 p.a.)
80%
A low doc fixed rate loan with 100% offset account.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
5.17%
5.56%
$375
$15 monthly ($180 p.a.)
80%
Enjoy a low doc loan with a fixed rate and 100% offset account.

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How do fixed rate home loans with 100% offset accounts work?

Fixed rate mortgages let you lock in a rate for a set period, usually ranging between one and five years. Some lenders also offer fixed rate terms for as long as 10 years.

A fixed rate loan with a 100% offset account lets you link an account to your mortgage, with the balance of that account offsetting your principal loan amount. This can save you a considerable amount in interest, and can actively encourage you to save money. As this is a 100% offset account, the entire amount in the account can be used to reduce your principal.

Donny’s offset account

Let’s compare two scenarios with Donny, our savvy borrower.

In the first example, let’s say Donny has a home loan with a rate of 6%. His loan size is $400,000, meaning his repayments are approximately $2,398 a month. At this rate he’ll pay a total of $863,353 over the course of the loan, $463,353 of which is interest.

If he has an offset account and keeps $20,000 in it over the course of his loan, he would pay off his loan three years earlier, and would save $55,759 in interest.

His repayments would still be the same, but more of each repayment would go towards the principal (the original loan amount).

Use our offset calculator to see how much you could save

How to compare these types of mortgages

  • Fixed term. Think about how long you want to be locked into the rate. Terms can range from one to as long as 10 years. Choose a term you think you’ll be comfortable with, and remember that break fees are payable if you exit your loan before the term ends. If you plan to sell your property in the future ensure your fixed term accommodates this.
  • Fees. These type of loans may come with upfront and ongoing fees that could negate the savings you may make in the long run, so remember to take these into account.
  • Additional features. As well as an offset account, the home loan may offer you other features, such as a redraw facility, the ability to make additional repayments, or it may come as a package that offers discounts. Check to see if you stand to make any further savings.

Pros and cons

Pros

  • As the interest rate is fixed your repayments will remain the same during the fixed period.
  • The balance you have in the offset account will be taken off your principal loan amount, actively helping to reduce the amount of interest you pay.

Cons

  • You’re unable to refinance during the fixed rate period without incurring expensive break costs, which may mean you lose out on a much better deal if rates are cut. As with all home loan products, there are a few things to consider before applying. Some offset accounts come with account-keeping fees, so you should look into what you’ll be paying and whether this will eat into your savings.

Offset accounts are also not offered on all fixed rate loans, and may only be offered on more fully-featured home loans. These loans tend to come with higher interest rates and fees, so be sure to calculate the full cost of the loan.

Frequently asked questions

Can you use a 100% offset account to make a home loan repayment?

Yes. The accounts are linked and you can nominate it as your chosen account, but keep in mind this would reduce the balance in your account and affect the interest you pay on your home loan.

Does the offset account earn interest?

No interest will be earned on the balance in your offset account.

Marc Terrano

Marc Terrano is a Lead Publisher at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

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