This means you pay less and less in interest charges the more you keep in your offset. The funds you keep in an offset account balance against the whole amount you still owe on your loan – which includes both the remaining principal and the interest charged on it. Interest charges – the interest you pay on the principal, which is calculated daily and then added up and charged to your home loan balance monthly.The principal – the amount of money you borrow.Your home loan balance is made up of two things: But there are some things to keep in mind before you set one up. This means that your bank only charges you interest on your home loan balance minus the amount you have in your offset.įor this reason, an offset account could help you save quite a bit of interest over the life of your loan. Here’s the big difference: when your bank calculates interest charges, the money in your offset account balances against the amount you still owe on your home loan. You can also get a debit card and make ATM withdrawals from this account. You can even get your salary paid straight into your offset account.
You can withdraw and deposit funds at any time. It has the same features as an everyday transaction account and works in a similar way.
An offset account is linked to your home loan.
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