100% offset versus all-in-one

By Nila Sweeney

Q. What's the difference between 100% offset and all-in-one? Which type pays your loan off quicker?

Offset account loans are loans which have a linked savings (offset) account. 100% offset means that the nominal interest rate applicable to the savings account is the same as the interest rate applicable to your loan. So your savings account balance is working for you and gaining you maximum benefit. A further benefit is that as no interest is being earned on the savings account, no tax is payable. So after tax return is identical to your loan interest rate.

A. An all-in-one loan is essentially a transaction account and a home loan combined. It allows you to directly credit your salary or other income to the account and then withdraw your cash via ATM, EFTPOS, linked credit card or cheque book, as you need it. The major benefit of an all-in-one loan is that it enables you to decrease your interest charges by keeping your funds in the account for as long as possible. The interest rate on all-in-one loans may be slightly higher and you may also be charged a monthly access fee.

The most significant difference between the two types of loans is that available funds in the offset account are more readily accessible than the all-in-one loan account.

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