An Offset Account is a deposit account attached to your mortgage.

If your home loan has an Offset Account, you can shorten the loan term and reduce the interest that you would otherwise have to pay.

The money that you deposit into your Offset Account reduces the amount of interest that you owe.

When you deposit funds into the Offset Account, your principal is reduced, therefore the interest rates are calculated on the new principal amount.

Another advantage of an offset account is that you can withdraw funds from your offset account in emergencies.

Offset Accounts are generally more commonly available with variable rate home loans and full featured loans with higher interest rates.

Do your homework when looking into Offset Accounts because some loans charge fees and some are only partial Offset Loans, that only reduce interest by a portion of the amount saved, rather than the whole amount.

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