Australian mortgage guide
Offset accounts and extra repayments on an Australian mortgage
Both an offset account and extra repayments can reduce the interest paid on a home loan, but they work differently and product rules matter.
In short
An offset account is linked to the mortgage and can reduce the balance used to calculate interest while keeping funds accessible. Extra repayments directly reduce the loan balance.
Offset account
For example, a loan balance of A$500,000 with A$20,000 in a full offset may be charged interest as though the balance were A$480,000. Lenders can have different offset structures, fees and eligible account rules.
Extra repayments
Paying extra into the loan can reduce interest and shorten the repayment period. Some loans have redraw facilities; others restrict access to extra money paid in.
What a calculator cannot show
Actual results depend on daily balance calculations, rate changes, fees, redraw rules, fixed-rate limits, LMI and your lender's product terms. Confirm the details before changing your repayment strategy.
Use the Australian mortgage calculator to compare a simplified offset or regular extra repayment scenario. It is for general planning, not personal financial advice.