An offset account is a transaction or savings account that is linked to a home loan, and the
balance in the account is used to decrease the interest payable on the home loan. The
interest payable on the home loan is calculated on the difference between the home loan
balance and the offset account balance.
In Australia, many lenders offer offset accounts to their customers as a way to help decrease
the interest payable on their home loan. However, a common question that is often asked by
customers is whether it is possible to have more than one offset account linked to their home
loan. The short answer is yes, it is possible to have more than one offset account linked to a home
loan in Australia. However, there are some limitations and conditions that need to be met in
order to do so.
Limitations And Conditions Of Offset Account
● It is important to understand that not all lenders offer the option of multiple offset
accounts. Therefore, it is important to do your research and find a lender that does
offer this option if you are looking to have more than one offset account linked to your
home loan.
● There may be additional fees or charges associated with having multiple offset
accounts. These fees and charges can vary from lender to lender, so it is important
to read the terms and conditions carefully before applying for multiple offset
accounts.
● It is important to ensure that the balance in each offset account is sufficient to have
an impact on the interest payable on the home loan. If the balance in each offset
account is too small, then the impact on the interest payable on the home loan may
be negligible.
● It is important to ensure that you have the discipline to manage multiple offset
accounts effectively. This means keeping track of the balance in each offset account
and ensuring that you are not overspending in one account at the expense of the
other.
How Can You Have Multiple Offset Accounts?
If you’re interested in having multiple offset accounts, there is a simple way to achieve this.
By dividing your variable rate home loan into two (or more) separate loans, you can link each
loan to a different offset account. For example, let’s say you have a $500,000 home loan that
is split into two loans of $250,000 each. You can link one offset account to one loan and
another offset account to the other loan. This same method can be applied if you have three
or more loans and offset accounts. To illustrate, let’s assume that you have $25,000 in one offset account and $10,000 in the other. When you calculate the total interest payable on your loans, it would be based on the combined loan amount of $250,000 + $250,000, minus the balances in your two offset
accounts ($25,000 + $10,000). Therefore, the total interest payable on your loans would be
$465,000.
Why would someone want to have more than one offset account linked to their home loan?
There are several reasons why someone might consider having multiple offset accounts,
including:
- Better budgeting and financial management: Having multiple offset accounts can help with budgeting and financial management. By segregating your funds into different accounts, you can better track your spending and ensure that you are living within your means.
- Maximising the benefits of offset accounts: Offset accounts offer a great way to reduce the interest payable on your home loan. Byhaving multiple offset accounts, you can maximise the benefits of this feature and potentiallysave thousands of dollars in interest over the life of your home loan.
- Managing different savings goals: Having multiple offset accounts can help you manage different savings goals. For example, you may have one account for your emergency fund, one for your holiday savings, and one for your children’s education fund. By segregating your savings into different accounts, you can ensure that you are making progress towards all your savings goals.
It is possible to have more than one offset account linked to a home loan in Australia. However, there are some limitations and conditions that need to be met in order to do so. It is important to do your research and find a lender that offers this option, read the terms and conditions carefully, and ensure that you have the discipline to manage multiple offset accounts effectively. By doing so, you can potentially save thousands of dollars in interest over the life of your home loan and better manage your finances.
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