Up variable home loan has 50 offset accounts. Could it fix your mortgage-life balance?

This article was updated on 1 March 2024 to reflect the Up Home Variable Rate dropping from 6.15% p.a. to 5.95% p.a. 

Key points

• Up variable home loans come with up to 50 offset accounts
• Offset accounts are useful for lowering how much interest you pay
• With 50 offset accounts, you could organise your finances while paying off your mortgage faster

Offset accounts are lauded as one of the go-to tools for people who want to save money on their home loan.

An offset account can help to significantly reduce the amount of interest you pay on your mortgage, but it usually comes at the expense of a slightly higher interest rate, or fees. 

So, when I found out that Up has a variable home loan that you can link to 50 offset accounts, free of charge, it piqued my interest.

"Who needs fifty?" I asked.

Are 50 offset accounts too many? 

Realistically, I don’t think there are many people out there who would actually use all 50 accounts on offer (except, maybe, the kind of people who plan their outfits for the next 12 months inside an Excel spreadsheet).

But if they don’t cost you any extra, and all offsets contribute towards lowering your home loan repayments, having as many separate accounts as you need comes with a pretty big advantage: the potential to create a good mortgage-life balance.

The problem with ‘standard’ offset accounts 

Traditionally, you’d get one or two offset accounts for your home loan. Most people would deposit their salary into one, and their savings into another. 

After all, the idea behind an offset account is to have as much cash in the bank as possible, at any one time. 

Therein lies the problem: most people also want to spend their money. And I don’t just mean for day-to-day expenses. 

We’re talking holidays, Christmas presents, a new fridge, anniversary dinners, and the like – the big expenses that aren’t strictly necessary to your survival, but make life worth living. 

I, for one, would be searching for a balance between cashing up my offset and still being able to enjoy the fruits of my labour. 

When you’ve only got the one offset account, and you’re digging between couch cushions to top it up with every last cent you can find, the line between your spendings and savings can blur, resulting in guilt any time you make a withdrawal.  

The remedy? It could be as simple as having different offset accounts for a few different savings goals.

Track your savings goals while lowering your interest repayments

Where I think the usefulness of Up’s loan having so many offset accounts overtakes the novelty, is in the ability to track different saving goals while also lowering the interest repayments on your home loan. 

That’s a lot harder to do when you’ve got multiple goals and only one offset account to store the bulk of your money. 

When you take out a home loan with Up, your Spending and Saver account balances convert into offsets against your home loan. Unfortunately, this also means your Savers won’t generate savings interest any more. On the plus side, the amount you save on home loan interest should outweigh this over time. 

Using your existing Up accounts can come in handy if you’re already putting money aside for various reasons, like an upcoming holiday, an emergency savings fund, or a gift for someone close to you. 

You’re still managing to save time and money on your home loan, without sacrificing your enjoyment of life. A mortgage-life balance, if you like.

How the Up Home Variable Rate compares to other home loans

I know what you’re thinking. Don’t offset accounts usually mean higher fees and interest rates? 

Sometimes, yes. But that’s not the case with Up’s Home Variable Rate loan. 

The loan comes with a 5.95% p.a. interest rate (5.95% p.a. comparison rate*), which is far lower than the average basic variable rate without an offset in the Mozo database – 6.29% p.a. at the time of writing.

It’s also significantly lower than the average variable home loan with an offset account, which is 6.67% p.a. in our database. 

So, the rate is quite good when you compare variable home loans in our database, especially for a home loan with 50 free offset accounts. But what about fees? 

As mentioned earlier, Up’s offset accounts are free-of-charge. The same goes for virtually all of its fees. 

There are no ongoing, application, legal, settlement, or discharge fees, and Up may even cover the first $400 of your property valuation costs. 

While it’s not unheard of for a lender to do away with most of their fees (see, Athena and Unloan), it’s definitely uncommon to see one do it and maintain a competitive interest rate.

Check out Up's variable rate home loan here: 

Time and money: how much does an offset account save?

Everyone’s circumstances are different. To illustrate how much time and money an offset could save, we’ll look at an example of someone with a $600,000 home loan and $12,000 in an offset account.

For a home loan without an offset account and an interest rate of 5.95% p.a., you’ll pay $554,247 in total interest over a 25 year loan term. 

If you had $12k in an offset, not only could you save around $39,070 in interest repayments, but you could also shave approximately 1 year and 1 month off the length of your loan. That’s not counting any extra repayments, or any top-ups to your offset accounts you make. 

Say you were to save an extra $100 per month into your offset account. Doing that, you could be looking at total interest savings of $71,288 and shaving off about 2 years and 4 months from your loan term. 

Of course, these numbers hinge on the notion that you’ll never make a withdrawal from your offsets, which isn’t realistic for a lot of people. Even still, it certainly illustrates the utility and the reason why offsets are popular. 

What’s the verdict?

As for Up Home’s 50 offset account feature, maybe it’s just a novelty. But, it certainly got me thinking about what you could do with more offsets than usual. 

If you’re keen on checking out what Up’s home loans are all about, you can read our review of the Up Home Variable Rate, or compare home loans to see how it tracks against the competition.