A new app feature helps Australians optimize the benefits of their offset account.

A new 'Offset Benefit Insight' tool provides Australians with valuable insights on how offset accounts can substantially reduce their mortgage costs.

Although offset accounts are a common feature in home loan packages, many mortgage holders remain unaware of their potential to reduce monthly mortgage repayments.

The finance management app, Moorr, seeks to change this. Its latest feature, the 'Offset Benefit Insight' tool, aims to provide Australians with a clear understanding of how much money their offset accounts can save by simplifying interest savings into easy-to-understand figures.

"Many people struggle to grasp the full impact of their offset account's savings. Seeing exactly how every dollar in the offset account reduces mortgage repayments empowers Australians to take control of their financial future," explained Ben Kingsley, Moorr co-founder and property investor advisor.

"The 'Offset Benefit Insight' tool stands out by offering a personalized and transparent view of how much interest users are saving through their offset accounts," Kingsley added. "Once homeowners realize how their offset balance works for them, they'll start to view these accounts much more seriously."

To access this tool, users simply link their offset account to their home loan within the Moorr app and verify their loan's interest rate to calculate potential savings.

For example, if a homeowner has a $400,000 loan at a 6% p.a. interest rate with an offset account holding $20,000, the effective loan balance becomes $380,000. This results in savings of approximately $87,000 in interest and shortens the loan term by three years.

Moorr ambassador, renowned behavioral economist, and author Evan Lucas highlighted the power of offset accounts lies in compound interest.

“Just as compound interest amplifies returns on investments in cash, bonds, or equities, offset accounts reduce the interest owed exponentially. The less interest you pay, the more you can pay towards the principal, helping you own your home faster,” Lucas explained.

To maximize the benefits of an offset account, Mr. Kingsley offers the following tips:

- Deposit lump sums: If you receive a windfall or inheritance, consider placing it in your offset account. It may be more beneficial than keeping it in a high-interest term deposit or other investments.

- Use your offset as your main account: By having your salary deposited directly into your offset account, you can keep your balance higher for longer. Since interest on offset accounts is calculated daily, even small daily reductions in loan balance can add up over time.

- Optimize credit card payments: If you use a credit card for daily expenses, try to maximize the interest-free period. This allows you to keep as much cash in your offset account as possible before paying off the credit card balance.

Offset Accounts Gaining Popularity Amid Rising Costs

As Australians grapple with rising living expenses, more borrowers are turning to home loans with offset accounts. According to NAB, 70% of eligible new customers are now opting for an offset account, compared to just 50% two years ago.

The total amount of funds in offset accounts has surged by 55% since the pandemic, rising from $29 billion in 2020 to over $45 billion in 2024. Over the past year, NAB customers have deposited a median of $4,500 into their offset accounts each month.

Andy Kerr, NAB’s Executive for Home Ownership, noted that many Australians are cutting back on spending and channeling those savings into their offset accounts.

“By steadily contributing to their offset accounts, Australians have been able to mitigate the impact of rising interest rates and cost-of-living pressures. This approach is not only helping them pay off their mortgages faster but also providing them with easy access to cash when needed," said Kerr.

Recent data from APRA revealed that Australian borrowers had over $270 billion stored in offset accounts during the March quarter—an all-time high.

Discover how you can enhance your mortgage savings today. Call us at 1800 595 500, email us at [email protected], or visit us at vantagefinancial.com.au.

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