What is an offset account?
An offset account is like a savings or everyday account linked to your home loan, and can be one way to help reduce the interest paid and the length of a home loan.
Instead of paying interest on your mortgage and earning interest on your savings, the balance of the offset account is deducted from (or ?offset? against) the value of your home loan when monthly interest is calculated.
For instance, if you have a loan worth $400,000 and $20,000 in the offset account, your loan interest will be based on a balance of $380,000. This doesn't reduce the amount of your scheduled repayments, but, over the life of the loan, it should reduce the overall repayment amount because more of those payments will be going to pay off the loan and less to pay off the interest.
An expert Aussie Broker can help you compare a range of home loan features like these, and help calculate how much they could save or cost you in the long term. This service is part of your free appointment with an expert Aussie broker.