An offset account loan links your savings account to your mortgage. These accounts allow you to offset your savings, salary and other cash resources against your home loan. You pay less interest on your loan as you’re only charged interest on the balance.
For example, if you have a $300,000 mortgage and $10,000 cash on the offset account, you will only have to pay interest on $290,000 each month. However, since your monthly repayments are calculated on the original amount, you are effectively paying extra on your mortgage each month. The additional repayments enable you to clear your debts faster.