An offset account can help you to manage the interest payable on your home loan and reach your savings goal.

What is an offset account?

An offset account is a transactional account linked to your home loan.

The account balance is fully (100%) or partially “offset” against your home loan balance, so you’re only charged interest on the difference between the loan balance and the offset account balance.

How does an offset account work?

For example, if you had a $300,000 home loan and $20,000 in your 100% offset account, you’d only be charged interest on a loan balance of $280,000 ($300,000 - $20,000 = $280,000).

Because your offset account is a transactional account, you could withdraw your $20,000 at any time but you’d reduce the amount of interest you’re saving.

How can you use an offset account?

Some people deposit their salary into their offset account and use it like an everyday transaction account. Check whether this is an option as it is not available with all offset accounts.

It can also be used like a savings account to help you reach your savings goals while working to offset interest.

However you decide to use it, the more money in your offset account, the less interest you’ll pay on you home loan. This could help you to pay off your home loan faster and pay thousands of dollars less in interest over the life of the loan.

Why choose an offset account over a normal savings account?

The interest you pay on your home loan is usually higher than any interest you’d earn on a savings account. In this instance, savings in an offset could be doing more for you than if you had it in a regular savings account.

What should you look for in an offset account?

Not all offset accounts are the same, so check the details:

  • Is it a full or partial offset?
  • Can I access my funds easily?
  • Is there a minimum balance?
  • Is there a balance limit or withdrawal penalty?
  • Are there any fees?
  • Can you use the offset account for the transaction types you need?

Whether an offset account is right for you will depend on your individual circumstance so consider your options carefully. Contact our team of mobile lenders for more information.

Important information

Banking and Credit products issued by Police & Nurses Limited (BCU) ABN 69 087 651 876 AFSL/Australian Credit Licence 240701. Any advice does not take into account your objectives, financial situation or needs. Read the relevant Product Terms and Condition, before acquiring this product in considering and deciding whether it is right for you. The Target Market Determination (TMD) for products is available on request. Lending criteria, terms & conditions, fees & charges apply.