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What is an offset sub-account and how does it work?

When you take out a home loan with a non-bank lender, your offset facility will be called an offset sub-account. An offset sub-account is a feature linked to your home loan that helps reduce how much interest you pay on your loan. We take into account any money in the linked sub-account and we only charge you interest on the difference between the loan balance and the offset balance, which then reduces the amount of total interest charged. Your monthly repayment amount will stay the same, which means you will pay down more of the balance of your loan, and will pay off your loan faster.

Key things to know:

It's a sub-account of your loan, not a separate deposit account. This means it will be closed when the loan is closed. If you intend to keep the offset amount as cash when you close the loan, you will need to move it to a different account prior to your lender providing your final payout figure when closing your loan
Funds in the offset sub-account are not covered by the Financial Claims Scheme (FCS) deposit guarantee
The offset balance cannot exceed your home loan balance
You get full access to your money in the sub-account via online and/or mobile banking, ATMs, EFTPOS, and a debit card

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What is an offset sub-account and how does it work?

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