Offset accounts: how they work and which lenders offer them
An offset account is a transaction or savings account linked to your home loan. Instead of earning interest, the balance is subtracted from your loan balance when interest is calculated, so $50,000 in offset on a $750,000 loan means you're charged interest on $700,000. You keep full access to the money.
Offsets are now common: the RBA says the share of housing loans with an offset account rose from around 40% to 55% over the five years to 2026. But an offset is only worth paying for if your balance saves more than the fees or rate premium attached to it. This page explains the maths, partial offsets, the difference from redraw, how to check yours is working, and which lenders we review offer offset and at what cost.
By Better Rate Mate Editorial Team · Last reviewed
General information only. It doesn't take into account your objectives, financial situation or needs. Check the lender's key facts sheet, credit guide and TMD before you apply. We don't compare every lender, and we may earn a commission if you apply through our links.
Offset calculator
Enter your loan, rate and the balance you'd keep in an offset to see the interest and time it saves, and whether that covers what the offset costs.
Offset account calculator
The interest and time an offset balance saves, and whether it covers the offset's cost.
Interest saved over the loan
$141,574
Paid off 3 years and 2 months sooner, with the same $3,687 monthly repayment. About $1,869 of interest saved in the first year.
Assumes the offset balance stays the same, a 100% offset, monthly principal and interest repayments and an unchanged rate. A partial offset (such as 40% on some fixed loans) saves proportionally less. Fees and rate differences between loans aren't included unless you enter them.
Mortgage repayment calculator, with extra repayments and interest-only
How an offset account saves interest
Most loans calculate interest daily on the outstanding balance. With a 100% offset, the offset balance is deducted first. Your required repayment usually stays the same, but because less of it goes to interest, more goes to principal and the loan is paid off sooner.
Moneysmart's example: on a $750,000 loan with $50,000 kept in offset, you pay interest on $700,000. If your balance will always be low (it suggests under $10,000), offset may not be worth any extra cost. As a rule of thumb, divide the annual cost of the offset by your rate to find the average balance you need to break even: at 6.23%, a $299 annual fee needs an average balance of about $4,800, and $10 a month ($120 a year) about $1,900. Any rate premium on the offset loan raises that figure. The offset calculator at the top of this page works out the interest and time your own balance saves.
Partial offsets on fixed loans
A few lenders let you keep an offset during a fixed term, but only part of the balance counts. Bankwest's fixed loans, for example, can link an offset account where 40% of the balance offsets your loan. As an illustration at 6.23%, $50,000 in a 40% offset saves interest on $20,000, about $1,246 a year, against about $3,115 a year in a full offset. Bendigo Bank is one of the few lenders we review that offers a full offset on fixed rates.
Offset vs redraw
Both reduce interest. Redraw means making extra repayments into the loan itself and withdrawing them later if the loan terms allow; an offset account is a separate account with its own BSB and account number. Offset money is your savings; redraw money has been repaid to the lender, and taking it out is borrowing again.
That difference matters if your home might become an investment property. The ATO looks at how borrowed money is used: redrawing for private spending creates a private-purpose borrowing, and if you later rent the property, interest on the loan is only deductible for the part used to produce income. Money held in an offset never reduced the loan balance, so withdrawing it doesn't create a new borrowing. Get tax advice before you convert.
Which lenders offer offset accounts?
Most lenders offer offset on a variable loan at a price: a monthly fee, an annual package fee or a slightly higher rate. Few offer it on fixed loans.
| Lender | Offset | Cost | On fixed loans? |
|---|---|---|---|
| CommBank | 1 (Digi), up to 2 (Simple), multiple (Standard Variable) | No offset feature fee on Digi and Simple (checked 2 October 2026); Wealth Package $395 a year | No |
| Westpac | Up to 10 (Rocket Repay) | Priced with the $395 Premier Advantage Package | No |
| ANZ | ANZ One offset (Standard Variable) | $10 a month | No |
| NAB | Up to 10 (Tailored variable) | Monthly service fee listed | No |
| ING | 100% via Orange Everyday (Orange Advantage) | $299 a year | No |
| Macquarie | Up to 10 (Offset Home Loan) | $248 a year | No (variable accounts only) |
| ME Bank | Up to 10 (CompleteME, variable) | $395 a year | No |
| BOQ | 100% (Clear Path) | $10 a month | No |
| Suncorp Bank | Optional 100% (variable) | Fee waived in the $375 package | No |
| Bendigo Bank | 100%, up to 6 (Flex, Complete) | See fee schedule | Yes, full offset |
| Bankwest | 100% offsets (Simple); up to nine (Complete package) | $10 a month each on Simple; no monthly fee in the $395 Complete package | 40% offset available |
| Athena | 100% (Power Up) | $0 fees | No |
| Unloan | None (redraw only) | n/a | n/a |
4 checks to make sure your offset is working
An ASIC review found some banks failed to manage offset accounts properly, so some customers paid more interest than they should have, without their repayments changing. Moneysmart's four actions:
- Check your offset account is linked properly, in your bank's app, online banking or statements; don't assume it's working because you asked for one
- If you're unsure, or can't see your interest savings, ask your bank
- Check whether the offset needs to be relinked whenever your loan changes: refinancing or switching products can break the link
- Act quickly if something looks wrong, because offset failures can cost you money for a long time before you notice
What are the downsides of an offset account?
Cost is the main one: offset loans often carry a monthly or annual fee, or a higher rate than the same lender's basic loan. Offset only works on variable loans at most lenders, so you may have to give up a fixed rate or split the loan. Excess balances above the loan amount earn nothing: Macquarie, for example, notes that if your offset balance exceeds the loan balance you aren't paid interest on the excess. And money sitting in an offset is easy to spend.
An ASIC review found some banks had failed to link offset accounts properly, so customers paid more interest than they should have. Moneysmart's advice is to check your statements show the offset benefit, and to re-check the link after any refinance or product switch.
Is it better to have an offset or pay off the mortgage?
For an owner-occupied loan, a dollar in a 100% offset saves the same interest as a dollar of extra repayment, but stays accessible. Extra repayments into a loan without fees can be cheaper if you don't need an offset's flexibility, and redraw gives some access. If the property could become an investment later, offset keeps your tax options open.
General information only. It doesn't take into account your objectives, financial situation or needs. Check the lender's key facts sheet, credit guide and TMD before you apply. We don't compare every lender, and we may earn a commission if you apply through our links.
What to watch for
- The rate premium on an offset loan compared with the same lender's basic loan.
- Partial offsets (some fixed loans offset only a percentage of the balance).
- Offset balances that don't show a saving on your statement: ask the lender to check the link.
- Offset accounts left unlinked after a refinance or product switch.
- Redrawing for personal spending if you might rent the property later.
Common questions
What is an offset account and how does it work?
It's an everyday or savings account linked to your home loan. Its balance is deducted from the loan balance when interest is calculated, so you pay less interest while keeping access to your money.
What is the downside of offset accounts?
They usually cost something (a monthly or package fee, or a higher rate), they're mostly unavailable on fixed loans, balances above the loan amount earn nothing, and some banks have failed to link them properly.
Do you pay tax on an offset account?
An offset account doesn't pay you interest; it reduces the interest you're charged. So there's no interest income to declare, which is one reason offset can beat a savings account for a borrower.
Can you have an offset on a fixed rate loan?
At a few lenders. Bendigo Bank's Flex and Complete loans offer a full offset on fixed rates, and Bankwest offers a 40% offset on fixed loans. Most major banks don't offer offset during a fixed term.
What is a partial offset account?
An offset where only part of the balance reduces your loan, usually on a fixed rate. Bankwest's fixed loans, for example, offset 40% of the linked account's balance, so $50,000 counts as $20,000.
How do I know my offset account is working?
Check your app, online banking or statements show the offset reducing the interest charged. If you can't see the saving, ask your bank, and re-check after any refinance or product switch, which Moneysmart warns can break the link.
How much do I need in an offset for it to be worth it?
Divide the offset's annual cost by your interest rate. At 6.23%, a $299 annual fee needs an average balance of about $4,800 to break even, before any difference in rate.
How much does an offset account save?
On a $600,000 loan at 6.23% over 30 years, keeping $30,000 in a 100% offset saves about $141,574 in interest and repays the loan about 3 years and 2 months sooner, if the balance stays at $30,000 and the repayment doesn't change. Use the offset calculator for your own figures.
About rates on this page
We don't quote lenders' interest rates: they change daily and with every RBA decision, and we don't have a live rate feed. The averages we quote are the RBA's published figures for the month shown. Always get the lender's key facts sheet, which shows the rate and comparison rate for your loan amount.