Mortgage Off-Set

A mortgage off-set account is a type of savings account that can be used as a tool to reduce the amount of interest charged to your loan each month. Every dollar you have in the off-set account translates to a dollar less that interest will be charged on in your home mortgage loan. For example: If your home loan balance is $100 000 and you have $5000 in your off-set account, each day the lender will look at the two accounts and calculate the applicable interest. So if the $5000 remained in the off-set account for every day of a month, interest would be calculated on an amount of $95 000 for that period.

It's just as if your savings are sitting in your home loan account but you have the benefit of access to the money at all times. This allows your salary and savings to work for you at a greater level than if they were just sitting in a normal savings account earning minimal interest.