If you have a home loan you need to consider using an offset account

An offset account could save you thousands and shave years off your mortgage.

Attaching an offset account to your home loan makes a portion of your interest payments disappear. Better still, you can save your money and still have access to it at the same time.

You can start comparing loans with offset accounts in the table below or jump ahead to learn more about how offset accounts can save you money.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier)

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier, P&I)

3.64 % p.a.

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4.03 % p.a.

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Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier)

Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.

  • Interest rate of 3.64% p.a.
  • Comparison rate of 4.03% p.a.
  • Application fee of $0
  • Maximum LVR: 80%
  • Minimum borrowing: $150,000
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Compare variable rate 100% offset account home loans

Offset accounts could potentially save you thousands in mortgage repayments over the life of your home loan.

Rates last updated May 22nd, 2018
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
$395 p.a.
New borrowers or refinancers from another lender get a discounted rate with this package loan.
$0 p.a.
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
$248 p.a.
Get a sharp rate and a 100% offset account. Borrowers must have a 30% deposit.
$395 p.a.
Save on interest with a 100% offset account and save on other ME products with this package loan.
$395 p.a.
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
$395 p.a.
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.
$395 p.a.
A low deposit package home loan. Combine your loan to get discounts on your interest rate and other NAB financial products.
$395 p.a.
No application fee and 100% offset account.
$395 p.a.
Enjoy discounted rates on a range of NAB products with a package loan. Get this loan with a 5% deposit.
$10 monthly ($120 p.a.)
Get a 100% offset account to save on interest charges, and pay no application fee.
$395 p.a.
Refinancers can get $1,500 cashback. Conditions apply. Package your home loan with a Qantas rewards earning Amplify credit card.
$10 monthly ($120 p.a.)
Earn Velocity Points on your mortgage (for a limited time, subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
$395 p.a.
Get discounts on a range of Commonwealth Bank products and enjoy the option of fee-free extra repayments during the fixed term.
$395 p.a.
A discounted variable loan package for under $500 000 home loans.

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How do offset accounts work?

An offset account is a transaction account attached to a home loan. The balance of a 100% offset account is taken away from the principal remaining on the loan for interest calculation.

Here is a breakdown of how a 100% offset account works:

This diagram explains how Offset accounts work

In this hypothetical situation, interest is applied to $130,000 instead of the full $150,000 owed. As savings grow, the amount saved on interest also grows. Effectively, this reduces the amount of interest charged over the life of the loan.

What is an offset account? Watch our summary below

Offset calculator

Use our calculator below to calculate the time and interest you can save on your mortgage when you put some money into an offset account. All you need to do is enter your home loan details, the amount of money you can put into the offset account, and how far into your mortgage you are when the offset starts (if you're already ten years into your loan the calculation will be quite different than if you've just started repaying the loan.

Why should I consider an offset account?

An offset account may save you interest and cut the length of a home loan. It will work best for people who can maintain a decent balance in their offset account and contribute further to it over time. It is worth shopping around, as offset accounts can differ in inclusions and fees.

Will a home loan with an offset account cost me more than a standard home loan?

Traditionally, home loans with offset accounts would either attract a higher interest rate or higher fees and sometimes both. However, with the emergence of smaller online lenders, many loans are feature-packed with market leading rates. Major lenders still tend to charge a premium for offset accounts, so it is worth shopping around.

Are there different types of offset accounts?

Yes, there are 100% offset accounts and partial offset accounts:

  • 100% offset accounts are the most common form. As explained in the above table, the balance of the offset account is deducted from the outstanding principal before interest is calculated. The balance of this offset account doesn't earn interest.
  • Partial offset accounts can be explained as an online savings account where the interest which would be generated by the balance pays off the principal of the loan, without the borrower having to pay tax on the interest. A 100% offset account can be a far more effective tool for reducing the interest paid on a loan.

How much interest can I save by using an offset account?

Below is a hypothetical loan scenario comparing the same loan without and with a 100% offset account.


From this example, taking the loan with an offset account saves a whopping $136,000 over the life of the loan. It also reduces the term of the loan from 25 years to 19 years and 8 months. Owning a home outright, debt free, is a goal that is well worth fast-tracking. Especially as first time buyers are waiting longer to plunge into the property market.

What fees do I need to be aware of?

Some offset accounts charge fees on standard transactions. It is well worth putting the research in as to whether the home loan you're applying for has a dud transaction account.

Offset tips

  • Savings

Build up your offset savings account by making regular deposits using your income, rental earnings or any other money you accumulate.

  • Long-term benefits of Offset Accounts

If you move into a new house but hold on to your previous property then you can turn your mortgage into an investment loan if you rent your property out to new tenants. The investment loan will be tax deductible.

I have a few more questions about offset accounts

Do my repayments get smaller with an offset account?

No, your repayments will stay the same with an offset account.

What will change is the proportion of the amount of your repayment which goes towards the loan amount, and the amount that goes towards interest.

Because the offset account lowers the interest due on your loan, more of your repayment goes towards the actual loan amount, known as the 'principal'.

How can I use an offset account as a buffer?

An offset account can be used to build a buffer of repayments and help pay a loan off even earlier.

Borrowers who do this will take out a regular 30 year loan and then pay it off like a 20 or 25 year loan.

To do this, a borrower would pay the the minimum repayments as usual, and then pay any extra amounts into the offset account. This gives them access to the funds in the event that they need the money, and gives them the extra wiggle room of lower repayments in the event that they have income issues or rates rise and they must stop making extra payments.

To find out what repayments would be on a 20 or 25 year loan, use our loan repayment calculator.

Is an offset account available through a trust?

Yes, some lenders do offer offset accounts on trust home loans. The policies surrounding this will differ depending on the lender, so be sure to raise this with your lender or broker first.

Should I use an offset account or invest in an online savings account?

The choice will depend on you. Generally speaking online savings accounts earn less in interest than lenders charge in interest for home loans. And, with a savings account, tax will be paid on the interest earned.

Marc Terrano

Marc Terrano is a content marketer manager 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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NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special

Start your home buying journey with 2 years of fixed repayments and a reasonable rate from a big 4 bank. Available with a 10% deposit.

UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupied Variable P&I Rate — borrowing $700,000 or more

Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Refinance to a UBank loan and you could get $1,000 in your USaver account (offer conditions apply).

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier, P&I)

New borrowers or refinancers from another lender get a discounted rate with this package loan.

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28 Responses

  1. Default Gravatar
    KATOctober 12, 2017

    Can your deposit sit in an offset account? For instance if I were to purchase a $650K property using a loan of $400K plus savings of $250k as deposit, could that $250k deposit money sit in an offset account thus reducing the interest chargeable amount to $150k?

    • Default Gravatar
      JonathanOctober 13, 2017

      Hello Kat,

      Thank you for your inquiry.

      Unfortunately, it is not as an offset account is a transaction account that can be offered as part of your home loan package and can be withdrawn anytime and not locked in. The initial deposit you have paid for the property is already on the lender’s books.

      If you wish to have an offset account connected to your mortgage, we advice that you speak to your lender of choice or to a mortgage broker to see your options. They can lay down the numbers you need to have a clearer view.

      Hope this helps.


  2. Default Gravatar
    DannySeptember 25, 2017

    Currently I have mortgage that is splitted to a variable and a fixed loan. The variable has an offset account. My question is that what are the benefits of using an offset instead of putting the savings into the variable account.
    Example, I have 20K savings, and -40K in the variable account. If I put 20K into the variable account, the balance is -20K, so the effectively, the interest rate paid is the same as using the offset account.
    Could you please help?

    • Staff
      DanielleSeptember 25, 2017Staff

      Hi Danny,

      Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

      Offset accounts are commonly associated with variable rate home loans, but the competitive nature of the home loan market means this feature is available with some fixed rate home loans. These home loans can provide the stability of a fixed interest rate and reduce the amount of interest you pay at the same time. While this repayment method is suitable for borrowers who have just entered the market, such as first home buyers, using this home loan as a hedging strategy may not be as effective. Variable interest rates fluctuate according to economic conditions and unless you’re an economic expert, predicting when interest rates fall or rise is no easy task. Either way you’ll still have the benefit of the offset account to reduce your principal. Now, offset accounts are considered to be deposit products. Therefore, they are considered investment accounts. In order to determine whether an offset account is better for you or not, you should not take any information provided within this article as financial advice. Rather, you should discuss your situation with a licensed financial advisor and work out whether an offset account might be right for your own personal financial situation or not.

      I hope this helps.


  3. Default Gravatar
    DiApril 28, 2017

    What happens if you have more money into your offset account than you have owing on your mortgage?

    Is there an upper limit to the amount of money you can have in an offset account?

    • Staff
      LiezlApril 28, 2017Staff

      Hi Di,

      Thank you for your question.

      If your offset account balance is bigger than your outstanding mortgage, your loan payments will be applied fully to the principal. This is because your mortgage will not accrue interest at this point. Kindly note that the balance of this offset account doesn’t earn interest.

      As for the balance limit, it would be best to check this with the bank or lender as they might have set a maximum limit.

      I hope this has helped.

      Best regards,

  4. Default Gravatar
    January 9, 2017

    If you are on interest only loan and have 100% offset attached. how the repayments would be affected. As an example you have a loan of $400,000 for years @ 4% with repayment of 1333.33. if you have another 20,000. How the repayments would work. From the above example, repayments don`t change, then how the 20K offset balance help?

    • Staff
      MayJanuary 12, 2017Staff

      Hi Raj,

      Thank you for your question and for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.

      Usually, with the interest-only offset, the balance in your offset savings account is offset against the amount owing on your home loan. For instance, you owed $400,000 on your mortgage and at the same time you had a $20,000 balance in your linked offset savings account, you would only be required to pay interest on an amount of $380,000.

      You can find more information on this interest-only offset account home loan on this page.

      Hope this has answered your question.


  5. Default Gravatar
    SteveJuly 14, 2015

    How does a visa card off set account work.

    • Staff
      JodieJuly 14, 2015Staff

      Hi Steve,

      Thank you for your comment on finder.com.au, a financial comparison website.

      The Visa debit-card is simply the type of card you may be able to attach to your offset account to allow you access to the funds you have put in there if you need it, it would still function as your typical offset account in terms of any funds you have deposited in this account working to help save you interest on your home loan.


  6. Default Gravatar
    ChrisJune 23, 2015

    Whats the difference between leaving money in an Offset Account and just paying off the loan with that money?
    I appreciate the Offset money is readily available and can be used like a transaction account, but is there a difference in interest saved or time saved in paying off the loan?

    • Staff
      BelindaJune 24, 2015Staff

      Hi Chris,

      Thanks for your enquiry.

      An offset account reduces the overall interest payable against your outstanding loan balance as it effectively ‘offsets’ the amount of interest you pay on your mortgage.

      For instance, if you have a 100% offset account and have $10 000 in savings in the account and your mortgage balance is $300 000, your interest charges will be calculated on the balance of $290 000.

      There are many benefits to keeping funds in your offset account rather than your home loan, such as the fact that accessing money through a redraw can come with minimum redraw amounts and fees which could make an offset more attractive than making additional repayments on your mortgage.

      On this page, you can use our home loan offset calculator to estimate how much an offset account could reduce your interest payable and how it reduce the time taken to repay your loan.


  7. Default Gravatar
    GaryFebruary 13, 2015

    I would like to know who can check my bank loan interest

    • Staff
      MarcFebruary 16, 2015Staff

      Hi Gary,
      thanks for the question.

      You can check how much interest you’re paying on your home loan by looking at your most recent bank statement. Alternatively, you can also call your lender to see what your current rate is.

      I hope this helps,

  8. Default Gravatar
    Irons78December 2, 2014


    My PPOR has now turned into an IP ? I have a fixed loan of approx $170k and a variable loan (VL) of approx $135K. I currently have approx $70k in savings. I also have an offset a/c to use if necessary.

    I’m unsure whether to continue using my existing savings in the offset a/c (currently 4.85%) and pay off the loan (I currently have the capacity to pay $3k per month in addition to my mortgage repayments) but I believe as a result of this method, it will reduce the loan interest and each year my income tax will potentially increase. I believe my other option is to use my existing savings and put them in a high interest savings acct (currently 4.02%) and deposit my additional monthly savings there, thereby the loan interest remains as high as possible for a better tax deduction and I will also pay minimal income tax on the savings earned.

  9. Default Gravatar
    RobynSeptember 15, 2013

    Can withdrawals be made from an offset mortgage account or is it locked in for a period of time or notice needs to be given etc.?


    • Staff
      MarcSeptember 16, 2013Staff

      Hello Robyn,
      thanks for the question!

      Most offset accounts function like a transaction account, meaning you get a linked debit card which you can use to make withdrawals or payments at any time.

      I hope this helps,

  10. Default Gravatar
    July 30, 2013

    I don’t have an offset account for my loan, but all money I have sitting on the loan. Are those available funds are doing a same job in offsetting the interest on the loan or there is a difference?
    What is better?

    • Staff
      ShirleyJuly 31, 2013Staff

      Hi Miro,

      Thanks for your comment.

      Since you don’t have an offset account with your home loan the money in your loan won’t be offsetting the interest on the loan.

      To determine whether an offset account is right for you, please see this page.

      Hope this helps,

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