Understanding offset accounts
An offset account links a transaction account to your variable rate home loan. It uses the money in that account to ‘offset’ your loan balance.
With a standard home loan, you pay interest on the total amount owing. But with an offset, interest is charged on the difference between the balances of your home loan and offset account. You can think of this like the offset account balance being subtracted from your home loan balance when interest is calculated.
This means you can pay less interest with an offset account. The more money you have in the offset account, the less interest you pay on your home loan.
What are multiple offsets?
With multiple offsets you can link more than one eligible deposit account to your home loan to act as offset accounts. NAB offers the ability to link up to 10 offset accounts to your eligible variable rate home loan.
When you have multiple offsets, the interest is charged on the difference between the home loan balance and the total balance of all your linked offset accounts.
Many people find that using this capability helps to simplify day-to-day money management. Opening several accounts to create buckets for your different expenses and savings goals can make it easier to see your money and control your spending – all while continuing to save on your home loan interest.
Learn more about bucketing your money.
How offset accounts work
Say you’ve taken out a 30-year mortgage for $500,000. Now, suppose you pay an average interest rate of 5.0% p.a.
We’re going to assume you have on average over the 30 years, $50,000 sitting in your linked account.
Over the life of your loan, interest will accrue on the balance of the loan less the $50,000 in your offset and could save an estimated $142,000. Effectively you end up paying off your loan sooner – your 30-year mortgage could end four years early.
Using multiple offsets is much the same, but the combined balance across all linked accounts is used when calculating interest.
Continuing the example from above, let’s say that you also have two other transaction accounts – one for everyday expenses that holds an average of $5,000 and another that you use to save for overseas holidays with an average balance of $10,000.
By linking all the accounts to your home loan, you now only pay interest on the loan balance less combined balance of $65,000 from all three offsets. This increases the potential savings to an estimated $175,000 over the life of the loan and could see you paying off your mortgage almost five and a half years early.
Benefits of multiple offset accounts
Reduce your interest
With offset accounts, every dollar in your linked transaction accounts saves you interest, every day.
Reach more financial goals
By leaving money in your offset accounts, you can continue to work towards other financial goals – such as a holiday, a new car or renovations.
Increase your cashflow
The flexibility of offset accounts means you can access the money in those accounts at any time. While taking money out of offset accounts will affect the interest you accrue, it’s comforting to know you can always access your cash.
Don’t have a home loan with us?
View our variable rate home loans with offset. Learn about the features and benefits of what our home loan can offer you and apply today.
How to get the most out of your offset accounts
There are a few ways to help you maximise the benefits of multiple offset accounts.
Calculate your potential interest savings
Our loan repayment calculator lets you customise a loan using several variables – loan amount, term, interest rate, and more.
You can also enter how much (on average) you’ll have in your offset account, and how much you hope to regularly add. This will show you how much you could save—and how much sooner you could pay off your loan.
Keep as much money in your offsets as possible
Since every dollar (every day) saves you interest, it makes sense to keep as much of your extra savings in your offset accounts as you can, for as long as possible.
Have your salary paid into your offset
Whether it’s your salary or any other deposits, having them paid into your offset accounts could reduce the interest you accrue on your home loan.
Learn how to set up your income payments using the NAB app.
Take advantage of interest-free days on your NAB credit card
By using your NAB credit card for everyday purchases and then paying the full closing balance by the due date each month, you keep your money in your offset accounts longer – offsetting interest on your home loan.
Tip: Set up a direct debit from your offset account to ensure you always pay the full balance of your NAB credit card on time.
How to set up an offset account
- Offset accounts can be linked to eligible variable rate home loans.
- Fixed rate loans aren’t eligible for linking to offset accounts until the end of the fixed rate period when your loan changes to a variable interest rate.
- You’ll need an eligible transaction account such as the NAB Classic Banking account.
- Any person named on an offset account must also be named as a borrower on the loan.
Explore other life moments
The difference between redraw and offset
Compare your redraw facility and offset accounts to learn how they can work in different ways to help you meet your goals.
Types of home loans
We explain all of our different loan types and packages.
Understanding the loan to value ratio (LVR)
We explain how Loan-to-Value Ratio works. Read more.
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Terms and Conditions
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Information is current as at 10 February 2025 and is subject to change.
The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article. Please consider the relevant Terms and Conditions for the products referenced in this article available from nab.com.au or from NAB before making any decisions regarding our products.
Terms, conditions, fees, charges, eligibility criteria and lending criteria apply. Only eligible NAB Home Loans can benefit from an interest offset arrangement including the NAB Tailored Variable Rate Home Loan. For example, Fixed Rate Home Loans and Base Variable Rate Home Loans with NAB do not benefit from an interest offset arrangement. You will not earn interest on the account balance of your transaction account whilst it is linked to a home loan under an interest offset arrangement.
Target Market Determinations for these products are available at nab.com.au/TMD.
NAB’s home loan, deposit and credit card products are issued by National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.