What’s an offset facility?

Both banks and non-bank lenders can provide offset facilities. Banks provide offset accounts and non-bank lenders provide offset sub-accounts. Both work similarly to a transaction account. They have a debit card to pay for things or withdraw cash, as well as all the other functionality you’d expect from a transactional account, such as statements and access to your money via an online portal or app.

But there is one big difference - an offset sub-account with a non-bank lender is not a deposit or savings account, and as such those balances are not guaranteed under the Australian Government's Financial Claims Scheme (FCS) in the unlikely event that the lender fails.

In both cases, offset accounts and offset sub-accounts, are linked to your home loan and the balance of money in your offset facility is taken away from your home loan balance when your interest is calculated.   

This means if you hold money in your offset facility over a period of time, you can reduce the amount of interest charged on your home loan. And because you're paying less interest, you can pay off your loan faster, too.

As an example, say you have a $600,000 variable home loan and you have $50,000 in your offset facilities, you'll be charged interest on $550,000 instead of the full $600,000.

How much could you save using an offset facility? Again, using a $600,000 loan as an example, if you have an interest rate of 6.0%, with no offset, and you pay principal and interest repayments, you’re likely to pay $431,661 in interest charges over a 20-year loan term. However, over the life of the loan, you’ll save about $101,000 in interest charges and will also reduce your term by more than a year. Actual savings will depend on your individual circumstances.

To find out more about the offset facilities available, and how interest is calculated, with a Qantas Money Home Loan, you can speak to one of our home loan experts on 1300 992 700.

Your repayments

It’s important to keep in mind that just because you’re paying less interest, it doesn’t mean your loan repayments will go down. You’ll have the same home loan repayment, but more of that amount will be going towards paying down the principal loan balance, and less going towards interest. Which means you’ll repay the principal sooner.

What’s the difference between an offset account and an offset sub-account?

Providing sub-accounts allows non-bank lenders to offer “bank‐like” functionality (real‐time payments, debit, an account to receive your salary) without holding an ADI license or customer deposits. 

Both offset accounts and offset sub-accounts work the same way to reduce the interest you pay on your loan, however there are some key differences to be aware of:

• Structure: an offset account is a separate bank account linked to the home loan, whereas a sub-account forms part of the loan itself, not a separate deposit account. Both hold funds that are accessible via debit cards, BPAY and digital wallets.

• Limits: because an offset sub-account forms part of the loan itself, the balance of funds within the account cannot exceed your home loan balance. For fixed rate home loans, there may also be a limit to both offset balances and repayments, fees may apply if these limits are exceeded.There are usually no such limits on an offset account, though banks may put their own limit on the portion of funds able to be used as offset.

• The Government’s Financial Claims Scheme (FCS) deposit guarantee: funds in an offset account are covered by the FCS, however funds in an offset sub-account are not covered by the FCS guarantee as they are not a separate deposit account. It’s worth noting that if a non-bank lender closes down, you don't lose your house - your debt is sold to another lender and you would continue paying your loan to the new party. You may just choose not to keep a large amount of extra cash sitting in it, beyond what you need to offset the loan.

Other benefits of an offset facility

Flexibility

An offset facility can not only help you to build good financial/saving habits and pay off your loan faster (and save on interest); it also offers you the flexibility of having funds on hand whenever you need - say, if you want to go on holiday, renovate, buy a car, etc.

Cash flow management

Some lenders only provide one offset facility. However, Qantas Money Home Loans provides you with the option to have multiple offset facilities* when you take out an Offset or Atlas Home Loan. Being able to access multiple offset facilities provides you with a powerful cash flow management tool, giving you the flexibility to ‘bucket’ your finances. Different accounts can be used for different purposes - one for bills, one for holidays, one for home renovations, etc. So you can easily see and keep track of your savings goals. 

Set and forget for ultimate convenience

One of the easiest ways to maximise the benefit of an offset facility is to automate your savings. You can arrange for your salary to be paid directly into your offset facility or set up an automatic transfer from your everyday account each pay day, helping more of your money work to reduce your home loan interest for longer.

Offset facility fees

Sometimes there is a cost involved in having a loan with an offset facility. It may be a monthly or annual servicing fee, or it could be built into the interest rate. If you don't have a certain balance in your offset facility, it may not be worth paying to have the feature. This is why it’s important to make sure you know what it’s going to cost you before you make your decision. You can find the offset fees for Qantas Money Home Loans on our rates and fees pages.

You have to be a Qantas Frequent Flyer member to apply for a Qantas Money Home Loan. This website contains general advice only. This information has been prepared without considering your objectives, financial situation or needs. You should consider your circumstances before acting on this information. 

*++ Offset facilities: Offset facilities are only available on the Qantas Money Offset Home Loan and Qantas Money Atlas Home Loan for both fixed and variable products. 

Offset facilities must be linked to an eligible Home Loan account and can only be linked to one eligible Home Loan account at any one time. 

Up to 6 offset accounts are available per Qantas Money Offset Home Loan. Linked offset accounts must be in the same customer name/s as the loan account. 

Up to 10 offset sub-accounts are available per Qantas Money Atlas Home Loan. Linked offset sub-account/s must be in the same customer name/s as the loan account. For Atlas Fixed Rate Home Loans, offset funds are limited to $20,000 per annum total across all sub-accounts. Additional funds may be subject to Early Repayment fees. All fees can be found on the fees page.

How to set up the offset facilities may change from time to time, and will be advised during the application process.

This is general advice only. Consider the relevant home loan Terms and Conditions and TMD, and your personal circumstances before you take out this product. Details can be found on the Terms and Forms page.

Complaints about the home loan or offset facilities should be made to the credit provider and provider of the offset facility by emailing: 

• Basic and Offset Home Loans funded by Bendigo Bank: myloan@homeloans.qantasmoney.com

• Atlas Home Loans funded by ColCap Financial: colcap.myloan@homeloans.money.qantas.com