How does an offset work?
An offset account is a transaction account which is linked to your variable home loan that offsets the balance in the transaction account against the balance of your home loan.
For example, if your home loan account has a balance of $400,000 and your offset account balance is $25,000, you will only be paying interest on $375,000.
While your interest payable reduces, your minimum repayment doesn’t change – so more of your repayment is going toward the principle amount, not to interest. As you’re paying down the principal amount of the loan faster, this can reduce the length of your loan and the total amount of interest you need to pay.
Maximise your offset account by having your salary deposited into your account every pay day. It doesn’t matter if you have thousands of dollars or only a small amount saved - every dollar in your offset account reduces the interest you’ll pay on your home loan.
As well as offsetting your home loan balance, an offset account offers all the features and flexibility you’d expect from a transaction account.
A linked Gateway Visa Eco Debit Card enables you to access your funds when and where you need them. Your money isn’t locked away or difficult to access, as it might be if you made extra repayments instead of utilizing an offset account. As it functions like a regular transactional account, you can use your Offset account and Visa Debit Card to shop online, instore or pay for your subscriptions like Netflix and Spotify.
You can also manage your money with complete visibility and make payments through our Gateway 2go mobile app and Online Banking.
How is Offset different to Redraw?
Both Offset and Redraw help reduce the amount of interest you pay on your home loan and enable you to pay off your home loan faster. However, if you’re looking for flexibility and the ability to transact and access your money quickly and easily when you need it, an Offset account could be a better option for you.
Redraw, on the other hand, may be the better option when you have a larger sum to pay down your home loan which may only need to access in case of an emergency.
Which Gateway Home Loans can you link an Offset account to?