What is an offset account?

Front and centre of saving both money and years off your home loan is having an offset account.

Front and centre of saving both money and years off your home loan is having an offset account. The amount held in this account will be offset against the balance of your loan. This means you’ll pay less interest on your home loan. This will directly affect the amount you pay off your loan each month and, over time, will add up and reduce the time it takes you to pay off your loan.

Will an offset account suit me?

An offset account could give you the benefits of reducing the amount of interest you pay while ensuring your funds are still accessible in a transaction account with card or chequebook access. We also have an online redraw option where you can tap into additional payments you've made on your eligible home or personal loan when you need them, from the convenience of your computer or mobile phone.

Which home loans can have an offset?

Offset accounts are commonly available on standard variable loans however it may differ between financial institutions. At Heritage, our Mortgage Crusher 100% offset account is available on our Standard Variable Home Loan. You'll also need a minimum balance of $500 to get started. To discuss your offset account options with us, talk to one of our Lending Specialists in branch or phone 13 14 22.

How does an offset account work? 

Although different financial institutions may offer varying level of offset accounts, a common option is a 100% offset account. A 100% offset means that the money in the account has the same interest reduction effect as if it was directly on your home loan. 

For example, Jenny’s home loan balance is $340,000. She currently has $12,000 in her 100% offset account. This means that Jenny is only paying interest on a home loan balance of $328,000.

If needed, Jenny is able to use the $12,000 at any time. However, by taking money out of her offset account this will directly affect the amount of interest she pays on her loan.

We've illustrated this example in a handy info graphic below.

Infographic - How does a home loan offset account work

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