Offset Accounts

What is an offset account and how does it work?
An offset account is one of the most powerful ways to save you hundreds and thousands of dollars over the lifetime of your mortgage. It works by tricking your loan into thinking you have paid more onto it, but still having complete access to that money. For example if you were to have $10,000 sitting in your linked offset savings account that you have full access to, your loan thinks that money is paid into it and charges your interest “ less” the $10,000.  So if your loan was for $100,000. Instead of paying interest on that full amount you would only pay interest on $90,000 of it. So imagine how much interest you will save! 
‘A 100 per cent offset account’ can sound too good to be true.
But these accounts enable you to have every cent of your money working to reduce your mortgage rather than sitting idly in your cheque or savings account earning you interest that you will then have to pay tax on.
Start with your wage
An offset account can be beneficial to save you money without having to sacrifice anything from your income. You can start by sending your wage directly into your chosen offset account. This way, the money you earn is immediately reducing the interest you pay on your home loan – even if you end up spending some of that money over the cycle of a month.
Why use an offset account
An offset account can help when you are not in a position to pay lump-sum repayments into your loan but want to pay the loan down faster by saving on the interest you’re paying. You may have savings you are gradually using for renovations, or your savings account might be your annual holiday fund, keeping it sitting in the offset allows you to use it as you normally would but its benefiting you at the same time, so you gain a lot while losing nothing.
What to look for in an offset account
Check to make sure you can meet the minimum requirements of an offset account. This could save you money on excess fees in the long run. Investigate options where bundling your services with your bank can mean saving on charges.

Homeowners with savvy money skills and those living between pays can both find benefits in offset accounts. When used to their full potential, the long-term savings and shorter mortgage life can be highly rewarding.