Is an offset account worth paying for?
by RatesBoard · 3 min read
Rates as at 24 Sept 2026
Ubank sells its variable home loan at 6.09% with an offset account and at 6.09% without one. The version with the offset costs $250 a year.
What an offset is worth is a question the forums keep asking. An r/AusFinance thread this week asked why anyone should keep their money anywhere but the offset, and the top reply, from u/keepin-it-real-au, called it "a guaranteed return". On r/AusHENRY this month, a borrower weighing whether to close their offset listed a $450 annual package fee among the factors.
An offset account is a transaction account linked to your loan. Each day, the lender subtracts its balance from the loan before charging interest, so each dollar in it saves interest at your home loan rate. All but one of the lenders on our board that sell a variable loan both with and without an offset charge more for the one with it. The exception is NAB, whose Tailored loan comes with an offset and still undercuts its Base Variable, 6.17% comparison to 6.44%. The rest add a flat fee or build the price into the rate.
| Lender | Without an offset | With an offset | The difference |
|---|---|---|---|
| Ubank | 6.11% comparison (6.09% advertised) | 6.33% comparison (6.09% advertised) | $250 a year |
| Bank Australia | 6.13% comparison (6.13% advertised) | 6.32% comparison (6.13% advertised) | $199 a year |
| Macquarie | 6.06% comparison (6.04% advertised) | 6.29% comparison (6.04% advertised) | An annual fee |
| Great Southern Bank | 6.10% comparison (6.04% advertised) | 6.20% comparison (6.14% advertised) | 0.10 points on the rate |
| Westpac | 6.00% comparison (5.99% advertised) | 6.77% comparison (6.39% advertised) | 0.40 points, plus a $395 package fee |
A flat fee is the easy one to beat. At 6.09%, an offset balance averaging about $4,100 saves $250 a year in interest, which pays Ubank's fee, and every dollar above that is a saving. Up charges nothing for its offset accounts (you can open up to 50), and its 5.95% comparison rate matches its advertised rate.
A rate premium is harder to beat, because it is charged on the whole loan. On a hypothetical $550,000 balance, Great Southern's extra 0.10 points costs about $550 a year in interest. Covering that takes an offset balance of about $9,000. Westpac's gap, with the package fee, takes more than $40,000.
The comparison rate overstates a flat fee on a big loan. It prices every loan as $150,000 over 25 years, so Ubank's $250 fee shows up as a 0.22 point gap. On a $550,000 balance, the same $250 is less than 0.05 points of interest.
If the cash would sit untouched anyway, redraw can do the job for free. Money paid into the loan saves interest at the same rate, and Macquarie's Basic Home Loan charges no fee to redraw at the same 6.04% as its offset loan. The catch is access: Moneysmart notes that some lenders limit redraw, charge a fee or delay the funds.
Offsets generally come with variable loans, and Macquarie's gives no offset benefit while the linked loan is fixed. For investors, tax comes into it. In the ATO's own example, an investor who redraws $9,500 for a TV and a lounge suite can't claim the interest on that $9,500. If your home might become a rental, ask your accountant before you choose.
What we can't see is your balance, or whether your offset is doing its job. Moneysmart reports that an ASIC review found some banks failed to properly manage offset accounts, so customers may have paid more interest while their repayments stayed the same.
To check yours, take your average offset balance over the past year, multiply it by your rate, and hold that against what the offset costs you.
We don't receive commissions or affiliate payments from lenders, and this is general information, not personal advice.