How does it reduce your interest?
Instead of calculating interest on the full loan amount, the interest is calculated on the loan amount minus the balance in your offset sub-account.
For example, on a 30-year loan of $500,000 with an 8% p.a. interest rate, your monthly interest charges would be $3,397.26. With the same loan plus $50,000 in an offset sub-account, your monthly interest charges would be $3,057.53.
What happens to your minimum repayment amount?
Your offset sub-account doesn’t reduce your loan repayment amount; it reduces the amount of interest you’re charged on your home loan.
What are the benefits of using an offset sub-account?
Generally speaking, an offset sub-account reduces the amount of interest you’re charged on your principal and interest home loan. As a result, more of your monthly loan repayment goes towards paying down the principal, reducing your loan balance faster.
Less interest
Reduces your monthly interest charges.
Shorter loan term
An offset sub-account helps you save on interest, which in turn can help you pay off your loan faster.
Flexibility
Offers you financial flexibility by keeping your additional payments accessible while lowering loan costs.
How can you maximise the impact of your offset sub-account?
Maximise your offset sub-account
Aim to keep the balance in your offset sub-account as high as possible to maximise value. Use the account for as many transactions as possible to always reduce your interest.
Transfer more, save more
Transfer more money in your offset sub-account, to increase your savings in interest charges.
Every transaction counts
Use the account for as many transactions as possible to always reduce your interest.
Next steps
To view or make payments into your offset sub-account, log into RedZed Connect. For more information call our team on 1300 722 462.
What’s next on your loan journey?
Your loan journey doesn’t end here. Explore these resources to take the next step with confidence.
What factors determine the amount of interest you pay?
Learn about interest - what it is, how it's calculated, and the different ways you can reduce your daily interest charges.
What is a redraw facility?
A redraw facility is a feature available with certain loan products that houses any additional repayments you make on your loan, above the minimum required amount.
What is an interest-only loan?
With an interest-only loan, you can nominate a set period where you only pay the interest on the amount you’ve borrowed.