Offset Facilities

An offset facility is a way to reduce your mortgage more quickly. A mortgage-offset account can replace your personal transaction account. You have your salary paid straight into your offset account that is linked to your mortgage but not a part of it. You can access your money in the same way you would if you still had any other accounts - ATM, Eftpos, Cheque, telephone & Internet Banking.

Offset and redraw are close relatives in that they essentially achieve the same thing. You pay extra in, allowing you to decrease the balance of your mortgage that is being charged interest. Then you can get it back again if & when you need it. Offset works by reducing the amount of interest charged on a loan. Every dollar deposited into the account means that same dollar in the loan is not charged any interest.

For example, if you have a mortgage of $100,000 and have $3500 in an offset account, your mortgage interest would be calculated on $96500. Offset is tax effective because the account itself earns no interest thereby legally minimising taxable income.