With the cost of living impacting many Australians in 2025, lots of us are looking for a way to reduce expenses.
Your mortgage is likely to be one of your biggest regular expenses so reducing that could be useful. One way that might work for you is getting an offset account for your mortgage.
What is an offset account?
An offset is an account linked to your home loan. When used properly, it can reduce the interest payable on your mortgage, letting you pay off your home loan more quickly and with fewer fees.
Unlike a redraw, an offset works like an everyday account so you can have a debit card for it and access it whenever you like.
A survey from the start of 2025 showed that only 54% of Australians have an offset account despite the huge savings available.
Pros and cons of an offset account
Despite what some people will tell you online, there isn’t a single method that works for everyone. Just because an offset works for your mates, doesn’t necessarily mean it’ll work for you too. Here are some of the advantages and disadvantages of an offset account:
You can pay less interest
The amount of money you have in your offset account has a direct impact on how much interest you pay.
For example, if you have $500,000 left to pay on your mortgage and you have $50,000 in your offset account, your lender will only charge interest on $450,000 of the loan*.
With the interest rate on savings accounts lower than the amount your bank charges you on your home loan, an offset will have more of an impact on your financial situation.
You get flexibility with your money
An offset account isn’t the only way to reduce the interest you have to pay. If you put that $50k straight into paying off your mortgage, you’d see the same benefits on your interest accrued. However, you no longer have access to that money.
And while some loans allow you to redraw on any amount you’ve paid over the figure due, these aren’t as easy to access. Some lenders also have limits on how often you can access your redraw, but an offset account works like a standard bank account.
Read more about the pros and cons of an offset account.
Offsets normally have fees
Almost all lenders will charge you a fee for an offset account.
For example, ANZ and CommBank charge $10/month while Macquarie charges $280/year. Those that say they don’t charge for their offset, often have higher interest rates.
If you don’t have much money in the offset, you might be paying more in fees than you’re saving in interest, so make sure you work this out before you sign up for one.
How much does an offset account cost?
Each lender has their own fees. As of October 2025, here are the fees from some of the most popular Aussie lenders:
| Lender | Annual cost of offset account | Source |
| ANZ | $120 | Link |
| Bank Australia | $199 | Link |
| CommBank | $120 | Link |
| ing | $299 | Link |
| Macquarie | $248 | Link |
| NAB | $96 | Link |
| Newcastle Permanent | $395 | Link |
| St George | $395 | Link |
| Virgin Money | $295 | Link |
| Westpac | $395 | Link |
It’s important to note that some of these fees include other benefits. For example, the Newcastle Permanent fee also offers benefits like discounts on insurance packages and fee waivers on other products.
Tips for using an offset
Just signing up for an offset won’t magically reduce your payments. If you want to get the most from this account, there are a few things to consider:
Full vs partial offset
Not all offset accounts are the same. Even in the table above, there’s a difference of $275/year between two lenders. So why might you pay more?
The biggest difference in offset accounts is how much of your balance is taken off your loan amount when the lender calculates your interest.
*Some lenders offer a 100% offset, which means if you have $50,000 in your account, they’ll take $50,000 off your debt when calculating interest.
However, not all lenders do this. Some offer a partial offset instead. If your lender has a 50% offset, then they’d only deduct $25,000 from your loan amount in the example above.
If you’re using this feature effectively, having a full offset will reduce your expenses considerably.
Pay your salary into your offset
Rather than treating your offset account as a savings account that you occasionally add money to, ask your employer to pay you into that account. That way you’ll have most of your money in one spot which reduces the amount you pay even more. You can still spend from it like normal, but you should see more of a difference.
Pay self-employment tax annually
Some self-employed people have found that paying tax annually rather than quarterly has a big benefit. By keeping your tax payments in your offset for a full year, rather than just three months, you can enjoy lower interest accrual for longer.
Sign up for an interest-free credit card
You should always be careful signing up for credit cards, but one trick people use is to get an interest-free card and pay it off every month.
With this strategy, people use the card to make all their payments, leaving their own money in the offset, and then paying it off before they are charged any interest.
Remember, once a credit card starts charging interest, it’s a lot more expensive than any money you’d be saving.
Read more about making the most of your offset account.
Applying for a home loan with an offset account
Depending on your circumstances, an offset account could help you with your regular repayments and the length of your mortgage.
If you’re interested in applying for a mortgage, or refinancing your home loan, so it works for you, speak to the Wisebuy brokers about how we can help.
