Home loan interest offset account

What is an offset account?

An offset account is an everyday bank account that’s linked to your home loan. You can deposit or withdraw from it as often as you like.

Every dollar in your account reduces, or offsets, the interest you pay on your home loan. For example:

$450K

Home loan balance

$50K

Offset balance

$400K

Balance you pay interest on

Calculate if you could save with an offset

Why choose our offset account?

100% offset

Every dollar in your offset counts towards reducing the interest on your linked Rocket Repay Home Loan, giving you immediate savings.

Easy access

Get all the benefits of a Westpac Choice everyday account¹, like a Debit Mastercard, ATM access, Apple Pay and Google Pay.

No minimum balance

Your entire balance is applied to offset your home loan, no matter how large or small.

Investor-friendly

Keep your accountant happy by easily separating your investment expenses from your personal transactions.

Package option

Package your loan for a home loan interest rate discount and fee waivers, including no annual card fee on our Altitude Black credit card ($395 annual package fee applies^#).

Your money’s safe

We’ve got your back, with our 24/7 Fraud monitoring and Fraud Money Back Guarantee².

How do I get the most from my offset?

An offset account works best when you keep as much money in it as you can, for as long as you can. Here are a few easy ways to do this.

Deposit your salary into your offset.

This way every dollar of your income’s always working for you.

Pool all your extra money into your offset.

For example, if you have a savings account with a lower interest rate than your home loan, you may be better off parking your savings in your offset.

Use a credit card, and pay before the due date.

Did you know most credit cards don’t charge interest if you pay in full before the due date? With our credit cards, you have at least 2 weeks to pay off your previous month’s bill. This means, if you bought something in the first day of your billing month and didn’t pay your card bill until the due date, you could leave the money sitting in your offset account for over 6 weeks. Bear in mind, if you don’t pay in full by your due date, you could be charged a credit card interest rate that’s higher than your home loan rate.

Tip:

If you package your Rocket Repay Home Loan, we’ll waive the $250 annual credit card fee on our most rewarding Altitude Black card (a $395 annual home loan package fee applies).

Not sure if an offset’s right for you?

Here are some things to weigh up:

Home loans with offset tend to have higher rates and fees
You won’t earn any interest on your offset balance, but you will save interest on your home loan
If your offset balance is always low, it may not be worth paying for this feature.

You might be better off with our basic Flexi First Option Home Loan – with our lowest variable rate, lower fees, unlimited extra repayments and redraws, and no redraw fees³.

And if your savings account has a higher interest rate than your home loan rate, you may be better off parking spare money in your savings account.

Worried about having too much access to your money?

If you think having tens of thousands in your transaction offset account might be too much of a spending temptation, you can always move some into your home loan as extra repayments. It’ll be available to redraw³ instantly anytime, and there’s no minimum amount or redraw fee.

Frequently asked questions

How does a full interest offset account work?

Every day, 100% of the balance in your Westpac transaction offset account is ‘offset’ against the amount owed on your Westpac Rocket Repay Home Loan. As interest is calculated daily and charged monthly, only the net amount (the balance of your loan minus your offset balance for that day) attracts interest. For an offset account to work effectively, any amount added to the account should be deposited and not withdrawn to reduce the amount payable on the loan.

You can save in two ways:

Home loan interest is calculated daily, so every dollar you keep in your offset reduces your daily home loan interest. When home loan interest rates are higher than savings account and term deposit interest rates, your interest saved would be higher than the interest you'd earn.
Paying less interest then reduces the amount of interest accrued on your interest (compounding interest) so you could pay your loan balance off faster.

Is it better to pay extra into my mortgage or offset?

It’s up to you, as parking your spare money in either your offset or variable rate home loan account will reduce your home loan interest by the same amount. As for accessing your extra funds, both of our Westpac variable rate home loans let you make unlimited extra repayments and redraws, with no redraw fee³.

Let’s say your offset transaction account balance is consistently over $40,000:

If you’re disciplined in your spending, you could leave your spare $40,000 in your offset
If having $40,000 in your transaction account’s ‘too tempting’, you could make an extra repayment of $25,000 into your home loan. The $25,000 would still be available to redraw, but psychologically it seems less easy to access.

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How does this compare with a basic variable home loan?

Here’s how our variable Rocket Repay Home Loan with an offset account compares with our basic variable loan – our Flexi First Option Home Loan.

	Rocket Repay Home Loan	Flexi First Option Home Loan
100% offset option	Yes	No
Offset account-keeping fee	$5/month¹ ($0 if packaged)	-
Package option	Yes	No
Extra repayments	Unlimited	Unlimited
Redraws	Unlimited	Unlimited
Redraw fee	$0	$0
Interest rate offer	Variable rate package discount of 1.29% p.a. on loans over $150k	Our lowest variable rate
Establishment fee	$600 ($0 if packaged)	$0
Monthly fee	$8 ($0 if packaged)	$0
Annual fee	$0 ($395 if packaged)	$0

How do other customers save?

We’ve made up a few customer scenarios to show how an offset account can reduce home loan interest.

Example: Karishma and Paul’s next home

Thanks to building equity in their previous home, Karishma and Paul were able to make an initial $50,000 lump sum deposit into their new $1,000,000 home loan’s offset account, then maintain a balance of around $80,000. By packaging and splitting their loan, they got a % p.a. variable interest rate discount on their Rocket Repay Home Loan, a 0.20% p.a. interest rate discount on their fixed rate home loan, and an annual fee waiver on an Altitude Black credit card. By using their card for daily household expenses and paying their monthly card balance in full, they paid no card interest, and earned rewards points on their card purchases. Splitting their loan between fixed and variable gave them the certainty of fixed repayments for a portion of their loan, with the flexibility of offsetting $80,000 on the variable portion of their loan – which meant they’re only paying interest on $920,000. Tip: Karishma and Paul keep an eye on the interest rates of their variable and fixed loans: to minimise their interest, they could transfer their spare money into whichever account has the highest interest rate (making sure not to go over the $30,000 prepayment limit during their fixed loan term).

Example: Brett’s investment property

When Brett’s fixed interest term on his $500,000 investment home loan with another lender was about to come to an end, he refinanced to our Rocket Repay Investment Home Loan with $100,000 in an offset account, which gave him 24/7 access to his money. Brett’s only paying interest on $400,000 by keeping $100,000 in his offset account. Tip: Brett’s accountant let Brett know he could use his offset account solely for his personal transactions, to prevent them from inadvertently mixing with his investment home loan expenses.

Example: Cass and Polly’s first home

Having put all their savings towards their home’s deposit, Cass and Polly knew any mortgage offset account balance would be under $10,000 in their first few years. Instead, they chose our lowest variable rate home loan, with lower fees and a flexible redraw³ facility. By year 4 they’d made $20,000 in extra home loan repayments. After using our offset calculator, they decided to switch to our packaged Rocket Repay Home Loan and fix 50% of their balance. With their variable loan balance at $400,000 and $20,000 in their offset facility, Cass and Polly are only paying interest on $380,000 of their variable rate balance. Tip: As Cass and Polly are under 30, they qualify for our Westpac Life savings account. When their savings account interest rate is higher than their home loan rate, they could park up to $30,000 of their spare money in this savings account and earn more interest than they’d save by making extra repayments.

How do I get a Westpac offset account?

Choose a scenario below that describes you:

My Choice transaction account is in the same name as my Rocket Repay Home Loan >

You can link this to your Rocket Repay Home Loan.

Westpac App: Search Home loan offset in the Smart Search bar

Online Banking: Go to Service > Services > Account services and select Home loan offset settings

My Choice transaction account is in a different name to my Rocket Repay Home Loan >

First you’ll need to open a new Choice transaction account in the same name (or names) as your Rocket Repay Home Loan, and link it to your home loan account. You can do this in Online Banking or the Westpac App. (If your home loan isn’t packaged there could be a $5 monthly fee¹ – so you may want to close the first account).

Westpac App: Search Home loan offset in the Smart Search bar

Online Banking: Go to Service > Services > Account services and select Home loan offset settings

I don’t have a Choice transaction account, but I have a Rocket Repay Home Loan >

First you’ll need to open a Choice account in the same name (or names) as your home loan, then link it to your home loan account. You can do this in Online Banking or the Westpac App:

Westpac App: Search Home loan offset in the Smart Search bar

Online Banking: Go to Service > Services > Account services and select Home loan offset settings

I don’t have a Rocket Repay Home Loan >

Want a home loan with an offset account? You can apply online or request a call back. One of our home lending experts will be in touch.

Things you should know

Conditions, credit criteria, fees and charges apply. Residential lending is not available for Non-Australian Resident borrowers.

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information and if necessary, seek appropriate professional advice. This includes any tax consequences arising from any promotions for investors and customers should seek independent, professional tax advice on any taxation matters before making a decision based on this information.

Key Fact Sheet for Home Loans

Offset is available on a Rocket Repay Home Loan or a Rocket Investment Loan. The same offset transaction account cannot be linked to multiple Rocket Loans. The linked offset transaction account must be in the same name(s) as the loan. Only one offset transaction account can be linked to each Rocket Loan.

^*Comparison rate: The comparison rate is based on a loan of $150,000 over the term of 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

^#Premier Advantage Package: Conditions of Use and $395 annual package fee applies. You must either hold or be approved for a Westpac Choice transaction account in order to qualify and continue to receive the benefits of the Premier Advantage Package. Applicants must have a Westpac Choice transaction account linked to the home loan at the time of settlement and must keep this account open for 60 days after settlement. Before deciding to acquire a Westpac Choice account, read the terms and conditions, and consider whether the product is right for you. Tax consequences may arise from this promotion for investors and customers should seek independent advice on any taxation matters.
Premier Advantage Package Conditions of Use (PDF 120KB)

Interest rates are subject to change.

⁺⁺ Offset Calculator: This is an estimate of the potential offset savings based on the information provided: your actual savings may differ depending on your situation. Changes in interest rate will affect the calculation. Our lending criteria, and basis upon which we assess what you can afford, may also change at any time without notice.

The output or result of this calculator:

Is subject to the assumptions, which are subject to change.
Is prepared without knowing your personal financial circumstances. Before you act on the output of the calculators, please consider if it’s right for you: we recommend that you consult your financial adviser before taking out a loan. If you need more info, please call 1300 786 029.
Doesn’t represent either a quote, pre-qualification for a loan or an offer of credit.
Doesn’t include all applicable fees.
May not be taken into account if you apply for a loan with us, as we’ll make our own calculations. When assessing ability to service a loan, Westpac may use an interest rate that is higher than the current interest rate for the loan requested.

The interest rates used in the calculator:

Are current, as indicated on our home loan interest rate pages
Are Westpac's standard interest rates and include any package or promotional discounts
Are subject to change.

This mortgage offset calculator offers an estimate of the interest and time you could save by having money in your Westpac offset account, and is based on the info you’ve entered.

Calculator assumptions

Interest rate. This calculator doesn’t take into account compound interest savings.
Interest and loan term savings. This calculator compares a home loan without an offset account, to a loan linked with an offset account. Total Interest Saved = (Total interest paid on loan without offset) - (Total interest paid on loan with offset).
Extra repayments. Calculator is based on your offset account balance, and doesn’t take into account any extra mortgage repayments you might make to your home loan account.
Weekly, fortnightly or monthly repayments. Your initial loan will be set up as monthly. Weekly and fortnightly repayments are only available with P&I. To calculate these, we multiply your P&I monthly amount by 12 to get a yearly value, then divide either by 26 for fortnightly or 52 for weekly, and round it up.

¹Monthly $5 offset Westpac Choice account-keeping fee waivers:

The account’s linked to our packaged Rocket Repay Home Loan
You deposit at least $2,000 each month
You're under 30 years old, or a full-time tertiary student
You have an Australian Pensioner Concession Card or Health Care Card
You’re new to Australia, or an expatriate customer (for the first 12 months).

²Your offset account is a Westpac Choice account, which comes with our Westpac Fraud Money Back Guarantee: Customers will be reimbursed for any unauthorised transactions provided that the customer has not contributed to the loss and contacted Westpac promptly.

³Redraw facility: if you have ‘available funds’ (you’ve made extra home loan repayments) and you’ve activated your redraw facility, you’re free to redraw them with no redraw fee. Up to $100k will be available to redraw from your variable loan online or over the phone each day (unlimited in-branch). For fixed loans you can redraw up to your prepayment threshold during your fixed term. Read our Home Loan Redraw Authority form (PDF 66KB) for full details.

Credit provided by Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

Our home loan offset account

What is an offset account?

Calculate if you could save with an offset