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Offset Account Strategy — How to Save Thousands on Your Mortgage

June 21, 2026

An offset account is a transaction account linked to your home loan. Every dollar in it reduces the principal on which interest is calculated. It is one of the most powerful — and most underutilised — tools in Australian property finance. GeeVee breaks down exactly how to maximise yours.

How an Offset Account Works

If your loan balance is $700,000 and you have $50,000 in your offset account, you only pay interest on $650,000. At 6.1% interest rate:

Scenario Daily Interest Monthly Interest Annual Interest
No offset $116.85 $3,554 $42,700
$50k offset $108.49 $3,300 $39,600
Saving $8.36/day $254/month $3,100/year

The Salary Crediting Strategy

Credit your salary directly into your offset account the moment it arrives. Leave it there for as long as possible before paying bills. Every extra day your salary sits in the offset account reduces the interest you pay. On a $700k loan with $8,000 salary credited monthly, you save approximately $2,400/year in interest just from the timing strategy.

Offset vs Redraw — Key Differences

Feature Offset Account Redraw Facility
Tax treatment for investors Interest remains fully deductible Redraw can contaminate deductibility
Access to funds Instant (transaction account) Usually 1-3 business days
Flexibility Full — deposit and withdraw freely Restricted — some lenders limit redraws
Best for Investors and owner-occupiers Owner-occupiers only

The ATO Warning on Redraw for Investors

If you redraw funds from an investment loan for personal use, the ATO may rule that the redrawn amount is no longer deductible. This is a significant risk that catches many investors off guard. An offset account completely avoids this problem — the money never enters the loan, so deductibility is never compromised.

Whether you’re buying your first investment property, building a portfolio, or exploring SMSF property investment, the Collings Property Platform gives you access to off-market opportunities, portfolio tracking, investment tools, and property insights powered by GeeVee AI. Join free today and start building your property future. collings.com.au/portal

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