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Understanding home loans

Offset accounts explained


The information on this page does not apply to ANZ Plus products

An offset account can be a good way to reduce the interest charged on your home loan, while also giving you access to your money whenever you need it. Here’s an explanation of how they work.

What is an offset account?

An offset account is a transaction account linked to your home loan. You can make deposits or withdraw from it as you would with a regular transaction account.

The big difference is that when you hold money in an offset account over a period of time, you can reduce the amount of interest charged on your home loan. The higher the balance and the longer the period, the less interest you’ll pay.  And this could help you pay off your loan sooner.

Generally speaking, the offset feature is only available on variable rate home loans (although some lenders offer an offset feature on selected fixed rate home loans).


How to use an offset account

Some people may have their pay deposited straight into their offset account and treat it as an everyday transaction account. Others may use their offset as a savings account for things like holidays or renovations – or for less exciting purposes like setting aside money for their tax bill.

Offset account v normal savings account

Your money generally works harder in an offset account compared to a regular savings account.  That’s because the interest rate you pay on a home loan is usually higher than the interest you earn in a savings account.

Another advantage is the interest you save by using an offset account won’t be considered income – which means it won’t be taxed. On the other hand, the interest you earn on a savings account will generally be considered income – and that means it may be taxed.

Offset accounts and savings accounts may have different fees and charges that apply. For more information on the fees that apply to ANZ products, see the ANZ Personal Banking Account Fees and Charges (PDF)

Is an offset account right for you?

Everyone’s situation is different. Before deciding on a mortgage with an offset account, you may wish to consider a few factors.  If you want regular access to your money, then an offset might work for you.

But remember that most lenders will charge for an offset account. You may pay a monthly fee. Or if your offset account is offered as part of a package, there’ll be an annual package fee.

It may be worth considering whether the amount of interest you’re likely to save will be more than the fee. Your lender or financial adviser can help you do the numbers in order to understand whether an offset account is right for you.

What’s the difference between offset and redraw?

Redraw facilities work in a similar way to offset accounts, but there are key differences. Generally speaking, redraw facilities are less flexible, but they can have advantages too.

We’ve put together an article explaining how redraw facilities work. Or if you’ve already read that, we suggest reading our article that looks more closely at the differences between offset accounts and redraw facilities.

To sum up 

  • An offset account is a transaction account linked to your home loan.
  • It could help reduce the amount of interest you pay on your loan and help you pay it off sooner.
  • The more money in your offset account, the less interest you’ll pay.
Offset accounts explained
Home Loans Specialist

An ANZ One offset accountdisclaimer could help you save on interest

We can help you discover if an offset account is right for you.

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The information on this page does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you and read the relevant terms and conditionsProduct Disclosure Statement and the ANZ Financial Services Guide (PDF) before acquiring any product. 

Applications for credit subject to approval. Terms and conditions available on application. Fees and charges apply. Australian credit licence number 234527.

A $10 servicing fee applies per month per ANZ One offset account. Please refer to ANZ Personal Banking Account Fees and Charges (PDF) for fees and charges that apply.


ANZ Mobile Lenders operate as an independently operated ANZ Mortgage Solutions franchise of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. Australian Credit Licence Number 234527.