Own your home sooner with interest offset
Our interest offset facilities can make your savings work harder, by 'offsetting' them against your home loan. This will give you the flexibility of accessing your money when you need to, with the benefit of paying off your home loan sooner.
How full interest offset (Repayment Offset & Mortgage Equaliser Offset) works
- Each day we offset the balance/s in your linked Bank of Melbourne transaction account/s against the amount you owe on your home loan when calculating interest.
- Interest is calculated daily and charged monthly only on the net amount (your loan balance less your transaction account balance for that day).
- Use an interest offset facility to link a Bank of Melbourne transaction account to your home loan as your offset account. If you want, you can link up to 99 Bank of Melbourne offset accounts to your home loan to suit your saving needs, and is still able to offset that against the interest you pay on your home loan.
- To make your salary and savings work harder to pay off your home loan, move all your savings into your offset account and deposit your salary and any other income directly into your offset account.
- Unlike a savings account that earns interest (which you must declare to the ATO and pay tax on), you earn no interest on the balance in your linked transaction accounts. Instead full interest offset reduces the amount of interest charged on your home loan balance.
- The result is you don't pay tax on interest you haven't earned and the interest payable on your home loan is reduced.
Mortgage Equaliser Offset
- Available to eligible variable rate loan customers with principal and interest repayments.
- The balance from the nominated accounts is offset against the balance outstanding on your loan.
- Interest is calculated daily on the reduced loan balance amount, while keeping the same minimum monthly repayment.
- This effectively reduces the term of the loan, allowing you to own your home sooner.
If your home loan balance is $350,000 on a particular day and your linked savings account balance is $50,000 on that day, as interest is calculated daily you only pay interest on $300,000 for the day. You will not earn interest on the $50,000 in your offset account, instead the $50,000 is offsetting the interest charged on your home loan. As your offset account is reducing the interest charged on your home loan, but your standard repayments remain the same (reflecting the loan balance of $350,000), more money will be attributed to the principle and will in affect help you own your home sooner.
- Available to customers with eligible variable rate loans with interest based repayments.
- The customer must have their repayment set up as an internal automatic transfer or external direct debit from nominated accounts.
- The offset balance reduces the minimum monthly repayment amount, leaving the loan balance and loan term untouched.
Partial Interest Offset
- Available to customers with eligible fixed rate loans
- For the portion of the home loan equal to the balance in the linked transaction account, a reduced interest rate is charged.
How to apply
When you apply for a home loan you can choose interest offset as a feature on eligible loans.
The information on our website is prepared without knowing your personal financial circumstances. Before you act on this general information, please consider if it's right for you. If you need help, call 13 22 66.