A 100% offset account enables you to pay off your loan sooner by reducing your interest payments.

It works by only charging you interest on the balance of your home loan less the balance of your offset account.

Home loan offset calculator

The calculator lets you know how much in interest you’ll save depending on the amount you have in your offset account.

To get the most benefit out of an offset facility, the more you keep in your offset, the more you’ll save in interest each month.

Want to find out if you qualify for a home loan?

Call us on 1300 889 743 or enquire online today.

Example offset calculation

If you had a home loan of $500,000 and an offset account with $10,000, the bank will only charge you interest as if you owed them $490,000.

So how does this compare to putting your money in a savings account?

Let’s say that you were paying 5.00% per annum in interest and your bank’s savings accounts offered you 3.50% p.a.

If you were to put $10,000 in the savings account, you would earn $350 p.a. in interest.

However, by leaving that $10,000 in your offset account, you would save over $1,100 in interest per year.

That means your $760 per year better off by putting an offset account to work.

On top of that, the Australian Taxation Office (ATO) would actually tax you on the $350 interest you earned from the savings account.

Which lenders offer 100% offset facilities?

We’ve listed some of the loan packages offered by our lenders that have 100% offset accounts.

  • CBA MAV Standard variable rate / Standard variable rate / 12 month discounted variable rate.
  • Westpac- Premier advantage rocket investment loan / Premier advantage rocket repay home loan / Rocket repay home loan.
  • St George- Advantage home loan package standard variable rate / Standard variable rate home loan / Advantage home loan package 1 year discount variable rate.
  • Suncorp- Money manager standard variable / Standard variable rate loan.
  • ANZ Professional benefits standard variable residential land loan / Breakfree standard variable residential land loan / Breakfree standard variable package / Standard variable rate loan.
  • NAB Tailored home loan choice package / Tailored home loan / National flexi plus.
  • AMP- Professional & basic loans with offset accounts are available.
  • Citibank- Mortgage plus package home loan.
  • ING- Orange Advantage home loan.
  • And many more….

Which one is right for you?

Some offset accounts aren’t fully transactional and some lenders allow multiple offset accounts with one loan. Please fill in our free assessment form and one of our mortgage brokers will go through your options with you.

How does a 100% offset account work?

A 100% offset account is a linked transaction account that usually has ATM and cheque access.

By simply depositing your salary into this offset account, it can be used for all your daily expenses just like a normal cheque account, and the amount of interest that you pay for your loan will be decreased.

The more money that you have in your offset account, the lower your interest expense will be. You should consider the following to make sure you’re making the most out of your 100% offset account:

  • Have your salary deposited into your offset account so that the amount of interest you pay will be less.
  • Ensure that you have sufficient funds in this account to make your loan repayments.
  • You can redraw from your home loan account to offset account if need be.
  • Use your offset account for transactions with your debit card including ATM, EFTPOS, internet banking, cheque book and BPAY.
  • Repayments are made to the home loan account from the 100% offset account.

Basic loan vs 100% offset

Did you know that in some cases a basic home loan will actually beat a 100% offset account?

It depends on how much you have in your offset account and today’s current interest rates.

For example if interest rates are at 4% then you need to have $10,000 in your offset account to cover the cost of a typical $400 annual fee on a professional package home loan.

Whereas if interest rates are at 8% then you only need $5,000.

If you tend to not have much money in your offset account then you may not receive much of a benefit.

Should I put my extra funds in the loan or offset account?

Technically, there is no difference between putting your additional funds in the home loan account or in the 100% offset account.

In practice, we find it is better that you just keep your day to day funds in the offset account and put all your extra funds in the home loan account. This means that you won’t see the funds on a day to day basis which means you won’t be tempted to spend them!

If you have an offset account on an investment loan then it is usually best to keep your additional funds in the offset account. Read the below “Offset accounts on investment loans” section for more information.

Who can benefit from a 100% offset account?

A 100% offset account is available to anyone regardless of the amount of money they wish to borrow. There are no account keeping or hidden fees associated to this type of home loan so it won’t necessarily cost you any extra.

As a general rule we find that dual income families with high monthly expenses tend to benefit the most from an offset account as they need the most funds available for their day to day spending.

Can fixed rate loans have 100% offset?

The vast majority of lenders don’t allow 100% offset accounts for fixed rate home loans. However, we have a select few lenders that can consider this type of loan. You can find out more about 100% offset fixed rate loans on our flexible fixed rate page.

Offset accounts on investment loans

If you have an investment property with a tax deductible investment loan on it then an offset account may give you additional benefits.

If you make extra repayments into the loan account and then redraw them at a later date, then that portion of the loan may no longer be tax deductible. This is because the tax office looks at the purpose of the funds you redraw from the loan to determine if that portion of the loan is tax deductible.

If you make your extra repayments into an offset account instead of the loan account then this problem is avoided.

We regularly help customers buy a small unit when they are young, they make lots of extra repayments into the offset account and then later they buy a house to live in & turn their unit into an investment property. Because they made their extra repayments into the offset account for their unit’s loan, they have maximised their negative gearing benefits.

This is general advice only, please talk to a qualified accountant about the tax benefits of an offset account & the implications of redraws from investment loans to obtain accurate advice for your situation.

Can I have an offset account with a basic loan?

The major banks don’t offer offset accounts as a feature of their basic home loans. This means that if you’re borrowing less than $250,000, then you may need to take out a professional package loan to get an offset account.

In most cases, professional packages don’t have competitive interest rates for loans under $250,000.

However, there are some smaller banks, building societies and non-bank lenders that offer very competitive basic loans with offset accounts. These products are ideal for people who have a small loan and need the benefits of an offset account, or who prefer not to pay ongoing fees.

Apply for a loan with a 100% offset account

If you’d like to get expert advice on 100% offset accounts then please call us on 1300 889 743 or complete our free assessment form to talk with a mortgage broker who specialises in home loans with offset accounts.

  • BJohnson

    I have heard that there are some lenders that provide combining a fixed rate home loan with 100% offset feature, you guys have also mentioned the same above. I wanted to enquire do I need to pay higher fees for this feature?

  • Hi B Johnson,

    Lenders don’t charge a higher interest for an offset account however most will require you to pay an annual fee for this feature.

  • warham

    Hello. I’m here in Australia on a working visa and was thinking about starting a business here. Will I need FIRB approval for this?

  • Hey warham,

    You won’t need FIRB unless you’re a foreign government investor, that is a person or entity that will hold a substantial or controlling interest in the business. As long as you have the right business visa, you can start your business right away, avoid the $10,000 FIRB application fee and we can help you finance it.

    We have a number of business loan solutions available from a wide variety of major banks and lenders, whether you need start-up capital or working capital such as invoice lending or equipment finance. So please feel free to call us on 1300 889 743 and we can provide a free assessment of your situation and business needs. Or you can simply fill in this enquiry form:

  • Olive

    I’ve been thinking of applying with AMP bank and I’m glad to hear that they offset offset accounts too. Can I know what types of loans they’re specifically good at?

  • Hi Olive,
    We have an expert’s review on AMP’s home loans and this includes what they are great at and what drawbacks they have. Please check it out here:

  • Olliver

    I’m planning to apply for a mortgage and I want the loan to be fixed for 2 years as I want to be devoid of the stress of swinging interest rates. I want an offset account with this. Can I have an offset account with fixed rate loan?

  • Hi olliver,
    Usually, fixed rate loans have certain restrictions compared to variable interest loans. You may not be allowed to link an offset account to your loan. However, there are some banks who offer partial offset account even for fixed rate home loans. You may go through our fixed rate loans for more info https://www.homeloanexperts.com.au/home-loan-types/fixed-rate-loan/
    Please call us on 1300 889 743 or enquire online https://www.homeloanexperts.com.au/free-quote/ and on of our mortgage brokers can give you a quote for the best current fixed rate loans.

  • Melvin

    Hi, do you know which banks allow multiple offset accounts under one home loan?

  • Hi,
    Lenders generally only allow one offset account on a single loan. Unfortunately, it is unlikely that they will allow multiple accounts under a single loan.

  • Carmel

    I just want to calculate how long it will take for my offset account balance to equal the loan amount remaining and to have zero interest. The loan amount is $177,000, loan term is 30 years, the interest rate is 4.00%, monthly repayment is $1646 with $92,000 in the offset account.

  • Hi Carmel,
    You will stave off 12 years off your loan term and save $108,500 approx in interest if you keep the repayments constant at $845.03. Between year 10th and 11th of your loan term your offset balance and the home loan amount will be the same amount and you’ll pay zero interest from then on.

  • Elisa

    Hi, can you link an external account for your offset? Do I need to have the account with the same bank as my mortgage?

  • Hi Elisa,
    Yes, typically you can link an external account as the offset. It is completely up to you and is not a compulsion to hold it with the same bank.