There are lots of smart things you can do to help pay off your mortgage faster. One way is to be strategic with the way you do your everyday banking by switching to an offset account. Here, we give you some tips to help you make the most of an offset account.
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Using an offset account to help pay off your mortgage sooner
What’s an offset account?
An offset account can help you reduce the interest you pay on your home loan. It works like any normal transaction account, except it’s linked to your home loan.
Any money you have in your offset transaction account is ‘offset’ against the balance in your home loan account, reducing the amount on which interest is calculated on that day. Interest on your home loan balance is calculated daily, so the more money you can keep in your offset account each day, the more your home loan interest will be reduced.
You can open single or joint offset accounts in the app if you have an eligible Complete Variable Home Loan, Complete Fixed Home Loan, Variable Rate Home Loan or Fixed Rate Home Loan.
Get in touch if you have any questions about opening an offset account.
Tips to make the most of an offset account
Keep as much money as possible in it
This might sound obvious, but the more money you have in your offset account, the more your home loan interest will be reduced.
Get your salary paid straight into your offset account
This way, it will be offset against your home loan on the day you get paid.
Using a credit card could help
If you choose to use a credit card for your everyday purchases, it could help you keep more money in your offset account during the month – which means being charged less interest on your home loan.
Remember that it’s important to pay off your whole credit card statement balance (excluding any promotional or introductory balance transfer amount) by the due date each month to avoid purchase interest and any late payment fees. After all, you don’t want to cancel out any potential home loan interest savings with credit card fees. If you have a credit card with Bankwest, you can also use Bankwest Easy Alerts in the Bankwest App to receive an alert before your credit card payment is due.
Of course, consider what’s right for your financial situation. If using a debit card instead for your everyday spending suits you better, our offset accounts come with debit card facilities.
Use more than one offset account
Did you know that you can open up to nine offset accounts with your eligible Bankwest home loan? You could use them as ‘buckets’ for the things you regularly spend money on and save for – it’s one way to manage your money, while also saving on home loan interest. Plus, you can get a Platinum Debit Mastercard® for every offset account, so you can easily access your money.
Keep in mind that a monthly fee applies for each offset account held by customers who don’t have an eligible Complete Home Loan Package. Learn more about bucketing.
Remember, it's always a good idea to get independent financial advice when it comes to managing your finances.
What to watch out for
- If you’re using a credit card, be careful. Over-spending on your card can lead to financial difficulty, and not paying it off on time will incur a much higher interest rate on your card compared to the interest rate you pay on your home loan. This will cancel out the benefits of your offset account. You should also check the amount you pay in credit card fees, as they may be more than the benefits the card offers for your offset.
- Make sure you check the conditions of your home loan. Depending on the loan type and the provider, you might only be able to have some of your offset account’s balance offset against your loan. Instead of 100% of the money in your account offsetting your home loan, maybe only 40% of the balance is taken into account. Generally, fixed rate mortgages are less likely to offer a 100% offset.
- While offset accounts are free for some home loan packages, for others you may have to pay a monthly fee for each offset account. Be sure to check your home loan terms and conditions.
About this article
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Offset Transaction Account
Pair an offset account with your eligible home loan, use it as an everyday or savings account and you could save on home loan interest.
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The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. Also to the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL / Australian credit licence 234945, its related bodies corporate, employees and contractors accept no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.