What happens if I pay my whole mortgage into my offset account?

If you pay your whole mortgage amount into your offset account in Australia, your money doesn’t actually pay off the loan straight away.

Instead, it sits in the offset account and reduces the interest you’re charged on your mortgage. Here’s how it works: the bank calculates your daily interest based on your loan balance minus the balance in your offset account.

For example, if your home loan is $400,000 and you have $100,000 in your offset account, you’ll only pay interest on $300,000. This can save you a significant amount in interest over the life of your loan and help you pay it off faster, but the loan itself will still exist until you make actual repayments.

It’s important to note that while offset accounts offer great flexibility and can help you manage your finances smartly, they don’t automatically reduce your loan balance unless you make additional repayments directly onto your mortgage.

Also, offset benefits work best with full offset accounts linked to variable rate loans, which are common in Australia. If you want to maximise your savings with an offset account or need advice on structuring your mortgage for your situation, reach out to GetMyLending.

Our specialists in Sydney, are ready to help you find finance that works for you, tailored to your needs, give us a call on 1800 957 427