Glossary · Financial Portfolio

What is an offset account?

An offset account is a separate transaction account linked to a home loan. Its eligible balance reduces the loan amount used to calculate interest; it does not itself repay the loan.

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Plain English. Australian context.

Offset account

Know what the term means, what it does not mean and where to go next.

Meaning & context

What it means for your records.

Plain-English information to help you organise your financial picture.

Financial Portfolio editorial team
Australian record-keeping context
Updated 7 October 2026

A simple example

With a A$400,000 loan and A$25,000 in a 100% offset account, interest is calculated on A$375,000, assuming the funds are fully eligible. The loan balance is still A$400,000.

What to keep in your records

Keep the bank-account balance and loan balance as separate records. Identify which account offsets which loan, and use consistent statement dates when preparing your financial snapshot.

A common mix-up

Do not reduce the recorded loan by the offset balance and also count that same cash as an asset: that would count its benefit twice. Read ASIC Moneysmart’s explanation.

Is an offset account the same as redraw?

No. Offset money sits in a separate account; redraw relates to extra repayments already made into a loan. Their access rules and fees can differ.

Where can I check the meaning of offset account?

Use the ASIC Moneysmart source alongside the relevant statement or product documents. The examples here explain the term; they do not recommend a financial product.

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