What is an offset account?

An offset account sits alongside your home loan as a separate savings account. Each day, the balance held in the offset account is deducted from your loan principal before interest is calculated. This means you pay interest only on the difference between your loan amount and your offset balance, not on the full loan amount.

For example, if you have a $500,000 home loan and $50,000 in your offset account, interest accrues only on $450,000. The larger your offset balance, the less interest you pay overall. Your savings remain accessible, so you can deposit and withdraw funds while continuing to benefit from the offset effect.

There are two main types:

• Full offset: The entire balance in the offset account is deducted from the loan principal for interest calculation purposes.
• Partial offset: Only a portion of the offset balance (often 50%) is deducted from the loan principal when calculating interest.

Most mortgages offered through Gold Coast brokers feature full offset accounts, though loan terms vary by lender. The offset benefit works only while you hold both the loan and the offset account with the same provider. When exploring loan options, mortgage brokers can explain how offset accounts interact with your specific loan structure and whether refinancing to a product with offset features might suit your situation.