What is offset account?
An offset account is a transaction account linked to your home loan whose balance reduces the loan amount on which interest is charged — $50,000 in offset against a $500,000 loan means interest is charged on $450,000 only.
A 100% offset account is a transaction or savings account linked to your home loan. The balance you keep in it is subtracted from the loan balance when daily interest is calculated. If you owe $500,000 and hold $50,000 in offset, interest is charged on $450,000 each day.
The saving compounds quietly. On a $500,000 loan at 6% over 30 years, holding a steady $50,000 in offset saves around $230 in interest in month one and shortens the loan by 3–4 years if the offset balance is maintained. Unlike paying off the principal, the cash stays liquid and accessible.
Some lenders advertise 'partial offset' (e.g. 50% effective offset) — this is materially worse than 100% offset and worth checking carefully. Fixed-rate loans usually allow no or limited offset; the offset feature is a defining marker of premium variable products.
100% offset · offset · offset facility
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- Variable-rate home loan — A variable-rate loan moves with the lender's pricing decisions and the RBA cash rate cycle — the rate (and your repaymen…
General information only — not personal financial advice. Verified against https://ratesniffers.com.au/glossary on 2026-06-01.