Excellence Finance Pty Ltd logo

What is An Offset Mortgage?

Table of Contents


Ever wondered what is an offset mortgage? If you’ve ever heard it or chanced upon it while browsing online, you may be wondering what it is and how it works. In this quick read article, we’ll go over the basic points about offset mortgages.

Offset Mortgage Defined

An offset mortgage is a type of home loan offered by banks and other lenders in Australia. This type of home loan is offered by banks and other lenders and can help you save money in the long run while paying off your mortgage faster. But how does it work?

Firstly, you’ll need to open a linked savings account with the same lender that provides your offset mortgage. When you have both, the balance in your savings account is then offset against the balance on your home loan. Example, if you have a home loan of $500,000 and a savings balance of $50,000, the interest on your home loan will be calculated on the difference between the two amounts, which is $450,000.

Keeping your savings in the linked account effectively reduces the amount of interest you’re paying on your mortgage. This means you’ll pay less interest over the life of your loan and may be able to pay off your mortgage faster. Plus, you can still access your savings at any time, which makes an offset mortgage a flexible option.

Here are some additional things that you need to understand about offset mortgages in Australia:

  1. Interest rates: Offset mortgages usually come with slightly higher interest rates than regular home loans. However, the interest you save by offsetting your savings against your mortgage can more than make up for the higher rate. Confusing, right?
  2. Tax implications: The interest you earn on your savings in the linked account is generally treated as taxable income, while the interest you save on your mortgage is not tax-deductible. But if you use the savings in the linked account to make additional mortgage repayments, you may be able to reduce the amount of interest you pay overall.
  3. Fees: Offset mortgages may come with fees such as annual account fees or transaction fees. Be sure to compare different lenders and their fees before choosing an offset mortgage.
  4. Eligibility: Not all lenders offer offset mortgages, and you may need to meet certain eligibility criteria such as a minimum loan amount or a certain level of savings. 

In summary, an offset mortgage can be a clever choice for homeowners who want to save money on interest and pay off their mortgage faster. It’s crucial to do your research and compare different lenders and their offerings before choosing an offset mortgage that’s right for you.

Want To Learn More About Offset Mortgages?

Contact one of our offset mortgage experts here at Excellence Finance. Email us at at info@excellencefinance.com.au or call us (02) 9609 4655​. We’d be more than happy to answer your questions.

Want To Know Your Offset Mortgage?

Try our offset mortgage calculator today!


Excellence Finance

Leading Sydney mortgage broker. Helping you achieve your dreams FAST!

Seraphinite AcceleratorBannerText_Seraphinite Accelerator
Turns on site high speed to be attractive for people and search engines.