By BYRONS Lending · Updated 6 October 2026
What an offset does
A mortgage offset is a separate account linked to your home loan. With a 100% offset, a $600,000 loan and $40,000 in the linked account mean interest is calculated on $560,000 while that balance remains there. The loan balance itself is still $600,000. Interest is generally calculated daily, so changes in the account balance affect the benefit.
Four checks to make now
- Confirm the account is linked. Look in your lender’s app, online banking or statements. Check the loan split it offsets and whether it is a full or partial offset. Ask the lender if the link is unclear.
- Check the interest benefit. Look for offset savings or the balance used for interest calculations. If your statement does not show enough information, ask the lender to explain how your offset was applied. Repayments staying the same does not prove the offset is working.
- Check again after changes. A refinance, product switch or loan restructure may change the link or offset eligibility. Confirm it after the new loan settles.
- Compare savings with the cost. Consider your usual offset balance alongside package fees, account fees and any higher loan rate. A small balance may not justify a more expensive product.
Offset and redraw serve different purposes
Offset funds remain in a separate account. Redraw involves extra repayments made into the loan; access depends on lender conditions. If the property may become an investment, speak with your accountant before moving funds or changing the loan structure, because the tax implications can differ.
If something looks wrong
Contact the lender promptly, ask it to confirm the link and request an explanation of the interest charged. Keep statements and the lender’s response. If the issue remains unresolved, use the lender’s complaints process.
Source: ASIC Moneysmart: mortgage offset accounts.
Common questions
Does an offset account reduce my loan balance?
No. The money remains in a separate account and reduces the balance used to calculate interest. It does not repay the principal.
Is an offset account the same as redraw?
No. Redraw involves accessing extra repayments already made into the loan, subject to the lender’s terms. An offset is a separate account linked to an eligible loan.
Will my offset stay linked after refinancing?
Do not assume so. Check the new loan’s offset eligibility and confirm which account is linked after a refinance, product switch or loan restructure.
General information only. Loan terms vary; tax treatment and suitability depend on your circumstances.