Who offers true Offset account


I've read on SS a while back that some lenders don't offer a true offset account.
From memory this particular lending facility (possible St George) any funds in the offset account doesn't reduce the monthly payments but reduces the principle.

Can anyone tell me who offers an offset acct that does reduce the monthly payments or if this is the norm which lending facilities have T&C's that dont reduce the monthly payments.

The way our offset works with ANZ is according to your first point; any balance in the offset is applied to the principle, hence reducing the interest amount in the next payment.

Our repayments stay the same, but the interest component of the repayment is less (and principle component higher).

I thought this was the only way they worked! :confused: This effectively reduces the loan term as more principle is being paid off more frequently.

Also note that this "interest saved" component doesn't become part of the redraw amount available.

Are you thinking that the monthly repayment would be reduced but the term remain that same? So that any interest saved from the offset becomes effectively a prepayment and you sort of get a payment holiday... hmm, interesting.
And some 100% offset accounts charge you $5 or $10 a month for the privilege which means they're increasing the principal balance before providing any offset. Technically they're still 100% but there's a catch.
Heritage is anther that I am aware of.

As already said most fixed's dont have 100 %, they have 40 % if any

Notable exceptions are Adelaide Bank, and I recall Maybe CUA and The Rock

I use Credit Union Australia which offer 100% offset on both variable and fixed interest with no monthly fees.


Yes the do but they used to charge interest on quarterly rests rather than monthly rests which had an influence on the savings.
i think it was stgeorge that used to reduce principal. edit: and yes they still do reduce principal for PPOR, as below is only investment


Repayment offset for investment loans with interest based repayments.

Customers making interest based repayments on their investment loans and who have a linked Mortgage Equaliser 100% interest offset account, can now also take advantage of the 'repayment offset' option at no additional cost. This option works to reduce the required monthly interest based repayment amount by the amount of the monthly 100% interest offset benefit, rather than reducing the loan principal.
Last edited:

On an onwner occ IO UCCC loan thats IO, St George will apply the interest savings to lower the principal.

In some circumstances you can convince them to let you have an IO Investment loan on the PPOR, which has the repayment offset option as they call it

its really the only reason i ruled them out as an option my PPOR whenever i get it. dont know why they persist with not allowing for PPOR...though might enquire if i can get the repayment offset when i do find a place
We have an ANZ Breakfree product which we used to purchase land. We opted to make the loan interest only rather than P&I. We have an offset account attached and just presumed that the amount in the offset would be taken from the loan and we pay interset on the balance. This thread has now put doubts in my mind as to what we actually have. The first interest payment hasn't come out of the cheque account yet. Would my presumption be correct?
Hi Bell

I suspect you will make a full PI payment each month, with the interest saving further reducing the balance, least thats our experience