Sketch of a house and some home loan calculations under a coffee cup

Offset Home loans

An offset bank account that’s tied to your home loan can help you save money on your mortgage. In short, the more you have in your offset account on any given day, the less interest you’ll be charged for that day.

Keep in mind, an offset account home loan is also versatile. For example, you can use an offset account just like you would a regular bank account by having your salary paid into it, setting up direct debits or using a linked debit card for everyday purchases. Start comparing home loans now!

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Offset home loan comparisons on Mozo - last updated 24 June 2021

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
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    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <70% LVR

    variable rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a.
    2.21% p.a.

    A hot new super low introductory rate home loan for two years with no monthly or ongoing fees. loans.com.au has some of the fastest settlement times on the market. They can meet 30-day settlement timeline so you can start saving thousands, as soon as possible! Mozo award-winning online lender, friendly and local Australian based team. min 30% deposit.

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    Mozo Experts Choice 2021
    Variable Home Loan Special

    Owner Occupier, Principal & Interest, LVR <70%

    variable rate
    comparison rate
    Initial monthly repayment
    1.99% p.a.
    2.02% p.a.

    Yard’s low-rate variable special home loan is packed with all features – unlimited additional repayments, free redraw, 100% offset account. Enjoy a simple online application. Special rate applies to home loan applications submitted by 31st July 2021. Low Cost Home Loan winner in the Mozo Expert's Choice Awards for 2021.

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    Mozo Experts Choice 2021
    Discount Fixed Rate

    Owner Occupier, Principal & Interest, <80% LVR

    variable rate
    comparison rate
    Initial monthly repayment
    p.a.
    2.97% p.a.

    Have the certainty of fixed repayments with a competitive rate from BOQ. Flexible repayment options available and make up to $5,000 in additional repayments annually. Fixed Rate Home Loan Winner in the Mozo Expert's Choice Awards for 2021. $3,000 cashback offer when you refinance your home loan to BOQ, offer ends 27 June 2021 (T&Cs apply).

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    Mozo Experts Choice 2021
    Well Balanced

    Investor, Principal & Interest, LVR <80%

    variable rate
    comparison rate
    Initial monthly repayment
    2.24% p.a.
    2.30% p.a.

    Zero ongoing fees and free extra repayments and redraw facility with an option for an offset account. Winner of the Offset Home Loan Expert's Choice Award for 2021.

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    Discounted Variable Home Loan

    Owner Occupier, Principal & Interest

    variable rate
    comparison rate
    Initial monthly repayment
    2.94% p.a.
    3.34% p.a.

    Enjoy a great low rate with no ongoing fees. Ability to split your loan between fixed and variable. 100% offset account. $2,000 cashback offer for investor & owner occupied home loans over $250k with LVR ≤80% when refinancing to Newcastle Permanent.

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    Mozo Experts Choice 2021
    Smart Booster Home Loan

    1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    variable rate
    comparison rate
    Initial monthly repayment
    1.99% p.a.variable for 12 months and then 2.48% p.a.
    2.47% p.a.

    A super low introductory rate home loan with no monthly or ongoing fees. loans.com.au has some of the fastest settlement times on the market. They can meet 30-day settlement timeline so you can start saving thousands, as soon as possible! Mozo award-winning online lender, friendly and local Australian based team.

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    Details

^See information about the Mozo Experts Choice Home loans Awards

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

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Offset home loans , everything you need to know

If you’re looking to save on your home loan, picking one that comes with an offset account attached may be just the ticket.

This excellent feature means your savings stash is constantly lowering the amount of interest you pay on your mortgage, even while you’re using those funds for your day-to-day spending and bills. We’ve written a full guide to offset accounts that you can read in more detail or, check out the answers to some of the top question about offset accounts below.

How an offset account works

So you know that an offset account can save you on interest - but just how does it do that?

Basically, instead of being charged interest on your full mortgage amount, you’re only charged interest on how much you’ve borrowed, minus the balance of your home loan offset account.

Here’s an example: Say you had a $300,000 mortgage and $50,000 parked in the attached offset account. Instead of paying interest on the full $300,000, you would only have to pay it on $250,000.

Since interest is charged as a percentage of your loan amount, this lowered principal amount can mean huge savings over the life of a 25 or 30 year mortgage.

How much will I save with an offset account?

Now we get to the really important part: working out how much money an offset account could put back in your pocket.

Let’s return to our example from above. If you have a $300,000 home loan and $50,000 stashed in your offset account, you only pay interest on $250,000 of your loan. For argument's sake, let's say your home loan came with an interest rate of 4.00% and a loan term of 30 years. If you were paying interest on the full $300,000 amount, you’d be up for $215,609 in interest. But with your handy offset account, you’d only pay $179,674 in interest. That’s $35,935 saved and you barely even had to
lift a finger!

Keep in mind this example is only indicative, and you should crunch the numbers on your own home loan or talk to your lender to find out how much you could save.

What does a “partial offset account” mean?

Not all offset accounts are created equal, and it pays to double check what
you’re signing up for. A full offset account means that 100% of the funds in your account will be offset against what you owe on your home loan.

A partial offset account means only a part of the balance in your account offsets against your home loan amount. So, using the same example as above, if you have $50,000 in your 40% partial offset account, that means $20,000 (40% of $50,000) would be deducted from your loan principal. So, on a $300,000 home loan and you’d pay interest on $280,000 of your original loan amount.

Compare offset account home loans interest rates 

Having an offset account attached to your loan can help reduce the amount of interest you pay and has the potential for big savings However, one other easy way to save on interest is to choose a competitive home loan interest rate. Our Home Loans Interest Rates page can help not only help you compare home loans with an offset account, but some of the available interest rates in the market.


Picture of JP Pelosi
JP Pelosi
Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.

More FAQs about offset home loans

Does it cost more to have an offset account on my mortgage?

The short answer is: it might.

Generally, home loans with more features - like an offset account, extra repayments or a redraw facility - tend to have slightly higher interest rates attached than a basic, no-frills option. That means it's important to weigh up the cost of this higher interest rate, against the potential savings from having the offset account. It might only be a good idea if you have a large chunk of savings to park in the offset account.

The other added cost to consider is that some mortgages have an optional offset account, but you’ll need to pay an extra fee to access it. If this is the case, then just like with the interest rate, you’ll need to weigh up the benefit of having the offset account against the extra fee.

What’s the difference between an offset account and making extra repayments?

Another one of the features on offer for home loan borrowers trying to save on interest is the ability to make extra repayments. Similarly to an offset account, this lowers your principal loan amount quicker, cutting down on interest.

The benefit to making extra repayments is that you’re actually paying off your principal loan amount quicker, whereas with an offset account, you’re only lowering the portion of the loan amount you pay interest on. It’s also a little more common to find a mortgage offering extra repayments than an offset account.

The downside is that its less flexible. With your extra funds put away in an offset account, you can still access them, and use the account the same way you would a bank account. If you use those funds to make extra repayments instead, then you can no longer use them for daily spending. You may be able to get them back by using a redraw facility - but keep in mind there could be a fee for doing so, or a minimum amount you need to redraw.

It’s up to you to decide which option is better for your needs - or, if you opt for a full featured home loan, maybe you can use both!

How do I find the right offset mortgage for me?

Decided an offset home loan is right for you? Great! Now you just have to think about all the other aspects of a home loan, like the interest rate, fees, and other features. Then you have to find one that’s available for how much you want to borrow and works with the deposit you’ve saved up. Sound like a lot of work? Well, don’t worry, that’s where Mozo comes in.

You can check out some killer offset home loan options in the table above and click the blue ‘go to site’ button to go through to the lender’s website and start an application when you find one you like the look of.

Or why not use our home loan comparison tool to compare the rates and features on a huge number of mortgage offers from a range of lenders, including big banks, mutuals, online banks and non-bank lenders.

If you already have a home loan but want to refinance to an option that comes with an offset account (and a super low interest rate while you’re at it!) then take our Switch and Save calculator for a whirl. You can set it up to show you home loan options that suit your goals - whether that’s cutting down on your monthly repayments, or paying your mortgage off quicker.

Saving money on your home loan has never been so easy, huh?

Home Loan Reviews

Westpac Home Loan review
Overall 1/10
Westpac customer service is non existent.

Over a period of almost 20 years I have found myself having to deal with Westpac on several occasions through circumstance rather than by choice in relation to home loans/mortgages. I have never experienced worse customer service with any organisation. It is virtually impossible to connect with anyone either in a branch, online or on the phone who is genuinely able to help with your enquiry or who is willing or able to follow up on a query or complaint even if you do wait for hours on the phone only to then have your call drop out or return you back into the queue. Westpac customer service is not poor it is non existent & negligent in regard to its customers.

Read full review

Over a period of almost 20 years I have found myself having to deal with Westpac on several occasions through circumstance rather than by choice in relation to home loans/mortgages. I have never experienced worse customer service with any organisation. It is virtually impossible to connect with anyone either in a branch, online or on the phone who is genuinely able to help with your enquiry or who is willing or able to follow up on a query or complaint even if you do wait for hours on the phone only to then have your call drop out or return you back into the queue. Westpac customer service is not poor it is non existent & negligent in regard to its customers.

Price
1/10
Features
1/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Kerry, Victoria, reviewed 1 day ago
RAMS Home Loan review
Overall 1/10
No branches, high hidden fees, service dismal.

I've had nothing but issues with rams. Ad-hoc fees, charges. Unable to assist with any of my complaints and will only assist when external bodies get involved. Defaults on credit scores for one day late payments. Please beware.

Read full review

I've had nothing but issues with rams. Ad-hoc fees, charges. Unable to assist with any of my complaints and will only assist when external bodies get involved. Defaults on credit scores for one day late payments. Please beware.

Price
1/10
Features
2/10
Customer service
1/10
Convenience
2/10
Trust
1/10
Less
Linda, Victoria, reviewed 1 day ago
Commonwealth Bank Home Loan review
Overall 1/10
3 home loans , two savings accounts and a credit c

3 home loans, two savings accounts and a credit card with the Commonwealth Bank is not enough to warrant any kind of service so it seems - 3 attempts to call today - each call left on hold for more than 50 minutes - I am beyond frustrated - and all to simply increase my transfer limit for one transaction - too much to ask ? If you require any form of customer service by phone this is NOT the bank for you.

Read full review

3 home loans, two savings accounts and a credit card with the Commonwealth Bank is not enough to warrant any kind of service so it seems - 3 attempts to call today - each call left on hold for more than 50 minutes - I am beyond frustrated - and all to simply increase my transfer limit for one transaction - too much to ask ? If you require any form of customer service by phone this is NOT the bank for you.

Customer service
1/10
Convenience
1/10
Less
Vanessa, Victoria, reviewed 1 day ago
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