Compare Offset Home Loan Rates for July 2024

What is an offset account?

An offset account is a transaction or savings account linked to your home loan that saves you interest on your home loan repayments.

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.

This type of interest-saving feature is quite common with packaged and variable home loans. So if you're looking to save some cash (literally and figuratively), it's certainly one to compare!

Person putting coins into an offset account

Person holding a piggy bank offset account

How an offset account works

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 remaining principal, this 'offset' amount can mean huge savings over the life of a 25 or 30 year mortgage.

How much will I save with an offset account?

How much you save with an offset account will depend on how much money you have in it, the size of your home loan, your interest rate, and what type of offset account it is.

For example, you'll save more interest if:

You have more money in the offset account.
The offset is a 100% offset account.
Your loan size is small.
Your interest rate is low.

You can crunch the numbers on your own home loan or talk to your lender to find out how much you could save long-term. But in the era of Reserve Bank rate hikes, offset accounts can prove to be a compelling option.

Woman thinking about how much an offset account will save her

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.

Partial offset accounts are more common fixed rate home loans, since fixed mortgages tend to have more limited features.

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 over the life on your home loan.

However, there's no true substitute for a truly competitive home loan interest rate.

Woman comparing offset account home loan rates

Offset home loan FAQs

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

It might. Generally, home loans with more features tend to have slightly higher interest rates and fees than a basic option.

That means it's important to weigh up these costs against the potential savings from having the offset account.

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

Similar to an offset account, extra repayments lower your principal loan amount, cutting down on interest.

The benefit to making extra repayments is that you’re actually paying off your principal loan amount and gaining home equity, 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 extra repayments are less flexible. You may be able to redraw them if you have a redraw facility, but otherwise, they're not at call.

How do I find the right offset home loan for me?

An offset account is just one part of the home loan. You'll also need to consider the loan size you need, as well as other features, interest rates, and repayment types.

You can 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.