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Find and compare offset account home loans

Loan purpose

Loan amount

$

Deposit

Loan Term

151015202530

25 years

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Product

Fixed Rate Home Loan (with Advantage Package)

Real Time Rating™

1.86

/ 5
Interest Rate

5.19

% p.a

Fixed - 5 years

Comparison Rate*

4.76

% p.a

Company
Repayment

$1,298

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.86

/ 5
Go to site

Cashback

Receive $4000 in cashback when you refinance
Product

Green Home Loan

Real Time Rating™

4.00

/ 5

Winner of Best Green Home Loan, RateCity Gold Awards 2022

Interest Rate

2.13

% p.a

Variable

Comparison Rate*

2.55

% p.a

Company
Repayment

$1,291

monthly

Features
Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

4.00

/ 5
Go to site

Winner of Best Green Home Loan, RateCity Gold Awards 2022

Product

Low Rate Home Loan - Prime (Owner Occupied) (Interest Only)

Real Time Rating™

2.81

/ 5
Interest Rate

2.44

% p.a

Variable

Comparison Rate*

2.24

% p.a

Company
Repayment

$610

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.81

/ 5
Go to site
Product

Low Rate Home Loan - Prime (Owner Occupied) (Principal and Interest)

Real Time Rating™

3.67

/ 5

Winner of Best Home Loans Over 1m, Best Variable Home Loan, RateCity Gold Awards 2022

Interest Rate

2.24

% p.a

Variable

Comparison Rate*

2.24

% p.a

Company
Repayment

$1,307

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

3.67

/ 5
Go to site

Winner of Best Home Loans Over 1m, Best Variable Home Loan, RateCity Gold Awards 2022

Product

Low Rate Home Loan - Prime (Owner Occupied) (Interest Only)

Real Time Rating™

2.56

/ 5
Interest Rate

2.54

% p.a

Variable

Comparison Rate*

2.34

% p.a

Company
Repayment

$635

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.56

/ 5
Go to site
Product

Low Rate Home Loan - Prime (Investment) (Interest Only)

Real Time Rating™

2.43

/ 5
Interest Rate

2.59

% p.a

Variable

Comparison Rate*

2.39

% p.a

Company
Repayment

$648

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.43

/ 5
Go to site
Product

Low Rate Home Loan - Prime (Investment) (Principal and Interest)

Real Time Rating™

3.55

/ 5
Interest Rate

2.29

% p.a

Variable

Comparison Rate*

2.29

% p.a

Company
Repayment

$1,314

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

3.55

/ 5
Go to site
Product

Low Rate Home Loan - Prime (Investment) (Interest Only)

Real Time Rating™

2.17

/ 5
Interest Rate

2.69

% p.a

Variable

Comparison Rate*

2.49

% p.a

Company
Repayment

$673

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.17

/ 5
Go to site
Product

Low Rate Home Loan - Prime (Investment) (Principal and Interest)

Real Time Rating™

3.30

/ 5

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Interest Rate

2.39

% p.a

Variable

Comparison Rate*

2.39

% p.a

Company
Repayment

$1,329

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

3.30

/ 5
Go to site

Winner of Best Investor Home Loan, RateCity Gold Awards 2022

Product

Premium Plus Package Variable Rate

Real Time Rating™

2.36

/ 5
Interest Rate

2.94

% p.a

Variable

Comparison Rate*

3.34

% p.a

Company
Repayment

$1,413

monthly

Features
Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.36

/ 5
Go to site

Cashback

Refinance and get $3,000 cashback for home loans over $500k with LVR ≤ 90%. Limited time offer extended, T&Cs apply.
Product

Complete Package Fixed Investment

Real Time Rating™

1.83

/ 5
Interest Rate

3.29

% p.a

Fixed - 1 year

Comparison Rate*

3.97

% p.a

Company
Repayment

$1,468

monthly

Features
Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

1.83

/ 5
Go to site
Product

Ocean Variable Investment

Real Time Rating™

2.65

/ 5
Interest Rate

2.59

% p.a

Variable

Comparison Rate*

2.94

% p.a

Company
Repayment

$1,359

monthly

Features
Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied
Real Time Rating™

2.65

/ 5
Go to site

Embed

What is a mortgage offset account?

A mortgage offset account is a transaction account that is linked to your home loan. You can use it like you would use any other bank account, which includes being able to withdraw from it. 

An offset account allows you to lower the overall balance of your loan without having to make extra repayments by 'offsetting' the interest you pay. It won't lower your interest rate, but it will count towards your home loan balance which can help reduce the life of the loan. 

Essentially, it isn’t any different to a regular transaction or savings account, but when linked to your home loan an offset account is a way to reduce the interest you are charged. 

How does a home loan offset account work?

An offset account works by effectively lowering the overall balance of your home loan while still allowing you to access the funds. Any money you hold in your offset account is counted against the debt you owe your lender. This means you will pay less interest over the life of your loan, because your lender will be calculating interest on the value of the loan, minus whatever funds are in your offset account.

The main attractor of an offset account is that it can be used to reduce the life of the loan without affecting how you access the money. An offset account is essentially an everyday bank account and most lenders will allow you to use it as such, including the ability to withdraw funds from an ATM using a bank card or EFTPOS terminal. 

Comparatively, if you make extra repayments against your home loan, or use a term deposit, the withdrawals you have access to may be limited and you may face additional fees. 

Typically, lenders only offer an offset facility attached to a variable loan, however some lenders do offer fixed rate home loans with an offset option or allow you to use a partial offset. 

How much can you save with an offset account?

An offset facility works by offsetting the interest against your loan principal. For example, if you had a mortgage of $500,000 and an attached offset account with a balance of $100,000, when your lender calculated the interest owed they would calculate it against $400,000. For as long as the additional funds are in your offset account you will be charged less interest. 

However, while having an offset account can save you thousands in interest repayments over the life of your loan, it can also come with additional fees and there may be fewer loan products available with this feature, so it’s important to shop around and calculate the savings versus any additional account keeping fees. 

Another thing to keep in mind is that the minimum balance in your home loan offset account will need to be over a certain value to have a significant impact on your interest payments. If you are using the account as a savings account this shouldn't be a problem, but if you want to use it like an everyday bank account, you will need to be wary of how low the offset account balance falls. 

Can an offset account lower your minimum monthly mortgage repayments?

Typically an offset account will not lower your monthly repayments, but it does mean more of your money will go towards paying down the loan principal as you are paying less interest. While your monthly repayments may not change, your loan term should decrease as you are paying your loan off faster.

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Can you have an offset account with a fixed home loan?

Generally speaking, most lenders only offer a home loan offset account with a variable home loan. Some lenders may offer split loans with partial offsets, where a portion of your loan is fixed and the other is variable, and there are some lenders who offer fixed loans with an offset, but they are fewer and farther between and you may pay the price in additional monthly fees or higher interest rates.

Is an offset account the same as a redraw facility?

No, an offset account and a redraw facility are two different things. While both options can reduce the amount of interest you pay and assist you in paying off your loan balance faster, they have different features. 

An offset works like a transactional account and allows you to deposit or withdraw money as you wish. A redraw facility sits inside your home loan and allows you to withdraw additional repayments you have made. This means you may not be able to access the funds from an ATM or using a debit card. Some lenders may also put additional stipulations on a redraw facility, such as limiting the amount you can withdraw. There are also different tax implications between an offset and a redraw facility, so it’s best to look at all the options and work out which suits your financial goals. 

What are the pros and cons of an offset account?
  • You can use an offset account as a savings account, easily lowering your home loan interest without any additional effort
  • Easy access to your money allows you to withdraw for emergencies without any trouble
  • An offset account will help you pay off your loan faster and lower the overall loan amount by reducing the interest you pay
  • Often you will only be able to access an offset account through a variable rate home loan which may not suit your financial situation
  • An offset account typically won't lower your loan repayments and may result in additional fees
  • Unlike other savings accounts, you won't earn interest on the money in your offset account

How do you compare offset accounts?

It’s important to research and compare all your options when choosing a home loan with an offset account. Thankfully, there are a range of comparison tools available that can help take the hassle out of this process, including:

Comparison rates

Whether you're looking for a more traditional home loan or one with specific features like an offset account, the basic principles are still the same. A comparison rate for a product looks at not just the advertised rate, but the bigger picture, including upfront and ongoing fees. 

This is particularly important when you are considering a mortgage product that may incur additional fees, as an offset can. If the comparison rate is significantly higher than the advertised home loan interest rate you can assume the lender charges significant fees and may not be the best option. 

Comparison tables 

Comparison tables help you compare apples with apples by allowing you to filter and view a range of offset accounts within your specific parameters. You can use a comparison table to help you sort a selection of home loans by features including lowest rates or additional features. This can help you make a shortlist of options for your home loan package. 

RateCity’s comparison tables also give you the option of comparing offset accounts from a variety of lenders that offer them, including the big four banks. Even if you have existing products with one lender, it's worth considering the other options out there to make sure you end up with the best loan for your situation. 

Additional features

Offset accounts come in many different forms, from variable rate home loans to partial offset and others. When looking for the best home loan for you, it's important to consider all the options and think about how they would fit into your finances. Some lenders are very strict around what type of loans they will pair with an offset, but if you shop around you can find a lender that ticks all your boxes. 

Home loan calculators

Home loan calculators are another tool to help you in your search for an offset account. As well as knowing that you want an offset, you will still need to know the other home loan basics, like how much you may be approved to take out in a mortgage. RateCity’s Borrowing Power Calculator may also be able to point you towards lenders that may approve borrowers for said home loan amount with the features you require. 

Finally, the Mortgage Repayment Calculator may help you to narrow down your shortlist of home loan options based on which best suits your budget. Enter your details, including interest rate, loan amount, borrower type (owner-occupier or investor),  repayment type (principal & interest or interest only) and repayment frequency (weekly, fortnightly or monthly repayments) to see your estimated mortgage repayments, including interest repayments. This will help you get an understanding of what sort of savings you could achieve with an offset account and how it will impact your finances. 

How does an offset account work?

An offset account functions as a transaction account that is linked to your home loan. The balance of this account is offset daily against the loan amount and reduces the amount of principal that you pay interest on.

By using an offset account it’s possible to reduce the length of your loan and the total amount of interest payed by thousands of dollars. 

Example: If you have a mortgage of $500,000 but holding an offset account with $50,000, you will only pay interest on $450,000 rather then $500,000.

What is the difference between offset and redraw?

The difference between an offset and redraw account is that an offset account is intended to work as a transaction account that can be accessed whenever you need. A redraw facility on the other hand is more like an “emergency fund” of money that you can draw on if needed but isn’t used for everyday expenses.

How do you find cheap home loans?

With so many interest rate options and repayment types available, finding the cheapest home loan may depend on the type of loan you choose.

Whether you’re looking for an owner-occupier or investor loan, with interest-only or principal and interest repayments, on a fixed or variable interest rate, the cheapest home loan rate available may vary greatly.

One way to find the cheapest option for you is to narrow down your search and compare the options that best suit your individual requirements. RateCity’s home loan comparison tables can help you get started on your search and take the hassle out of shopping around.

How do I apply for a home improvement loan?

When you want to renovate your home, you may need to take out a loan to cover the costs. You could apply for a home improvement loan, which is a personal loan that you use to cover the costs of your home renovations. There is no difference between applying for this type of home improvement loan and applying for a standard personal loan. It would be best to check and compare the features, fees and details of the loan before applying. 

Besides taking out a home improvement loan, you could also:

  1. Use the equity in your house: Equity is the difference between your property’s value and the amount you still owe on your home loan. You may be able to access this equity by refinancing your home loan and then using it to finance your home improvement.  Speak with your lender or a mortgage broker about accessing your equity.
  2. Utilise the redraw facility of your home loan: Check whether the existing home loan has a redraw facility. A redraw facility allows you to access additional funds you’ve repaid into your home loan. Some lenders offer this on variable rate home loans but not on fixed. If this option is available to you, contact your lender to discuss how to access it.
  3. Apply for a construction loan: A construction loan is typically used when constructing a new property but can also be used as a home renovation loan. You may find that a construction loan is a suitable option as it enables you to draw funds as your renovation project progresses. You can compare construction home loans online or speak to a mortgage broker about taking out such a loan.
  4. Look into government grants: Check whether there are any government grants offered when you need the funds and whether you qualify. Initiatives like the HomeBuilder Grant were offered by the Federal Government for a limited period until April 2021. They could help fund your renovations either in full or just partially.  

What is a home loan?

A home loan is a finance product that allows a home buyer to borrow a large sum of money from a lender for the purchase of a residential property. The home is then put up as "security" or "collateral" on the loan, giving the lender the right to repossess the property in the case that the borrower fails to repay their loan.

Once you take out a home loan, you'll need to repay the amount borrowed, plus interest, in regular instalments over a predetermined period of time.

The interest you're charged on each mortgage repayment is based on your remaining loan amount, also known as your loan principal. The rate at which interest is charged on your home loan principal is expressed as a percentage.

Different home loan products charge different interest rates and fees, and offer a range of different features to suit a variety of buyers’ needs.

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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