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Your home loan is probably the biggest financial commitment you'll make in your lifetime. So what if there was a way to reduce the amount it costs – the interest you pay – and also pay it off sooner? There is. It’s called an offset account.
An offset account is a transaction or everyday banking account that can help you save on home loan interest. By linking this account to your variable home loan and depositing funds into it, you can lower the amount of interest you pay each month.
When calculating the interest on your home loan, the money in your offset account is deducted from the balance you owe on your linked variable loan account. This means you only pay interest on the remaining balance, which can help you save money.
Keep in mind that if your offset balance is higher than your loan balance, the extra funds won't earn interest or offset any other loan accounts.
For example, if you have $100,000 deposited into your offset account and the balance of the linked variable home loan account is $400,000, you’ll only be charged interest on $300,000.
If you need to use that $100,000 for an emergency, you can. An offset account functions like a regular everyday bank account, so you can access your funds at any time. However, withdrawing money from your offset account will increase the amount of interest you pay on your home loan.
With Macquarie’s Offset Home Loan, you can:
Splitting your savings into multiple offset accounts makes it easy for you to categorise and budget, while still helping to reduce the amount of interest you pay on your linked variable home loan account(s).
You can also label your offset accounts, so you know exactly what your savings are for. For example, if you're saving up for a holiday, you can open an offset account with the nickname 'Holiday'.
If you inherit a lump sum, or have a term deposit, you may want to consider placing those savings in an offset account. While it might seem counterintuitive if you're used to locking away your savings into a high interest account, an offset account can be beneficial. This is because your home loan interest rate may be higher than the rate on your savings account, and you'll also pay income tax on the interest you earn.
You can also set up regular savings payments into your offset account – so if you're used to putting away money for an annual holiday, you can still do that with an offset account and withdraw the money when you're ready to pay for your trip.
If you get a debit card with your offset account and online access to payments, consider using it as your default transaction account and let your employer know to make salary payments into the offset account. Every dollar helps.
Interest is calculated daily on an offset account, so even if the balance fluctuates with your day-to-day transactions, you'll still be offsetting your interest.
The more money you can keep in your offset, and the longer you keep it there, the more you will save. So, if you’re disciplined, you could use a credit card to defer everyday expenses by utilising the interest-free payment period.
It is important to always pay off the full balance when it’s due, as your credit card interest is likely to be higher than your home loan interest. Carefully managing your spending is also key, so consider whether this approach is right for you before signing up for a credit card.
Did you know with a Macquarie Offset Home Loan, you can open up to 10 offset1 accounts per variable loan account?
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This information is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 and does not take into account your objectives, financial situation or needs. You should consider whether it is appropriate for you. Lending criteria, fees and T&Cs apply.
Open and link up to 10 offset accounts per variable rate loan account for single or joint borrowers (up to 4 offset accounts per variable rate loan account can be requested at application stage). Company and trust borrowers can open up to 4 offset accounts which must be opened at application. Offset Home Loan Facility cannot be fully fixed and offset accounts cannot be linked to fixed rate loan accounts. For an Offset Home Loan Facility, the variable rate loan account must have a minimum limit of $20,000.
We will refund fees charged to you by domestic ATM operators on your Macquarie debit card in connection with domestic ATM transactions, but you’ll need to pay any other fee that you’re charged by any international ATM operator.
We don’t charge fees for card purchases or transactions made or processed outside Australia but others, such as the banks of international merchants, might.
Terms and conditions apply and are available upon request. Fees and charges apply. Annual Primary Cardholder Fee is waived for the Macquarie Black Card and Macquarie Platinum Card for the period you hold this facility with us.
The terms Offset Home Loan Facility fee and package fee are used interchangeably in our collateral and refer to the same fee.
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