What is an offset account?
Simply put, an offset account is a regular transaction account that’s linked to an eligible home loan. You can make deposits or withdraw from it just like you would with a regular transaction account, whether that’s online, using a debit card, or at an ATM.
The difference? The money you have in this account is then fully set-off against the outstanding balance of your home loan when we calculate loan interest. This means the interest you pay is based on your home loan balance less the balance in your offset account.
So, the more money you keep in your offset account, the less interest you’ll pay on your home loan over time. It’s a smart way to potentially save on interest costs while still having easy access to your funds.
Let’s say you have a home loan of $300k. You also have $20k sitting in your offset account. So instead of paying interest on the full $300k, you will only be charged interest on $280k ($300k – $20k). This can save money in interest payments over the life of your loan.
And the good news is that while most banks only offer an offset account on a variable rate loan, at Cairns Bank we offer an offset account for both our variable and fixed rate owner occupied and investment home loans. Our standard, fees apply, which we keep as low as possible. As a customer-owned bank, our goal is to help you own your home quicker, which is the way banking should be.
What’s the difference between a redraw and an offset account?
An offset account is different to a redraw facility – while both accounts can help reduce the amount of interest you pay on your loan, they work in different ways. Redraw is a feature that lets you withdraw funds from the extra repayments you’ve made on an eligible home loan. An offset account is a separate transaction account that’s linked to an eligible home loan where the balance is set-off against the outstanding balance of your home loan when we calculate loan interest.
Interested in setting up an offset account?
They’re available to our customers who take out an eligible home loan. Once your loan and offset account are in place, there’s nothing else you need to do. Get in touch with us today to learn more.