An offset account is one of the most powerful tools for reducing interest and accelerating your home loan repayment. It works like a regular bank account, but the balance is offset against your loan. For example, if you have a $500,000 mortgage and $20,000 in your offset account, the bank only charges interest on $480,000.
This simple mechanism can save you thousands over the life of your loan. Keeping your salary, savings, and day-to-day funds in the offset account maximises the benefit. You can still withdraw the money anytime, giving you flexibility without losing interest savings.
Offset accounts work especially well with variable-rate loans. They are ideal for borrowers with good cash flow or anyone who wants to minimise interest while keeping funds accessible. Even a modest balance can shorten your loan term significantly.
A mortgage broker can show you scenarios comparing a loan with and without an offset account so you can see the long-term impact. Pairing an offset strategy with disciplined budgeting is a smart way to pay down your home sooner.
