An offset account is a transaction account linked to your home loan. The balance in this account is "offset" against your loan balance, meaning you only pay interest on the difference.
Example
If you have a $500,000 loan and $50,000 in your offset account, you only pay interest on $450,000. Over a 30-year loan at 5.5%, this could save you over $60,000 in interest.
Tips to Maximise Your Offset
- Deposit your salary directly into your offset account
- Keep savings here instead of a separate account
- Time bill payments to keep the balance high for as long as possible