When it comes to managing your mortgage effectively, multiple offset accounts can be a game-changer. Whether you want to reduce your interest payments, increase your financial security, or manage your funds more efficiently, you can benefit a lot from multiple offset accounts.
In this article, Unconditional Finance will help you explore what multiple offset accounts are, what their benefits are, and which banks offer multiple offset accounts in Australia to give you an idea of your available options.
Understanding Multiple Offset Accounts
You probably already know how offset accounts work: An offset account is a bank account connected to your mortgage and works like a regular transaction account. It reduces the interest payable by offsetting the loan balance with the amount in the offset account. This means that if you have multiple offset accounts, you can distribute your funds across various accounts.
Example of Multiple Offset Accounts
Imagine you have a mortgage of $350,000 at an interest rate of 3.8%. If you have $30,000 spread across three offset accounts, the interest would be calculated on $320,000 instead of the full loan amount. This setup reduces the interest portion of your repayments.
The Advantages of Using Multiple Offset Accounts
Below are the key multiple offset account benefits you can enjoy, allowing you to manage your finances more effectively:
Increased Flexibility and Control
Having several offset accounts provides increased flexibility and control over your finances. You can allocate funds to different accounts based on specific needs, such as daily expenses or large purchases, which allows for better cash flow management and tracking. This strategic distribution of funds can help you stay organised and achieve your financial goals more efficiently.
Further Interest Reductions
As mentioned, the purpose of an offset account is to reduce the interest you pay on your mortgage. Therefore, having multiple accounts can amplify this benefit. By distributing your money across several accounts, the total balance offsets your loan amount, thus reducing your interest charges. This strategy can help you cut down on interest costs and speed up your mortgage repayment.
For example, aside from your account for regular expenses, you can also set up an emergency account where you deposit $300 monthly. If you end up not using these emergency funds, then the accumulated savings will significantly lower your overall repayments over the life of your loan.
Enhanced Financial Security
Using multiple offset accounts enhances your financial security by providing a buffer for unexpected expenses. With your funds distributed across various accounts, you can ensure that money is available to cover unforeseen costs without resorting to high-interest credit options. This approach offers peace of mind and strengthens your overall financial stability.
Easy Management for Joint Borrowers
If you have a co-borrower, using multiple offset accounts can simplify your expense tracking and expedite your loan repayment. This way, you and your partner can manage your personal finances more flexibly even while being joint mortgage holders.
Banks with Multiple Offset Accounts in Australia
There are many banks offering offset accounts, but here are some of the best banks for multiple offset accounts in Australia:
- Macquarie Bank: The Offset Home Loan package from Macquarie Bank allows up to 10 free offset accounts.
- Commonwealth Bank of Australia (CommBank or CBA): CommBank offers multiple Everyday Offset accounts.
- National Australia Bank (NAB): NAB allows certain accounts to function as offset accounts on variable rate loans.
- ANZ: Multiple offset accounts are available with the ANZ One offset account.
- Westpac: Westpac provides multiple offset accounts through their Rocket Repay Home Loan or Rocket Investment Loan.
- Bankwest: Bankwest offers up to nine Offset Transaction Accounts.
- ING: ING’s Orange Advantage home loan provides multiple offset accounts.
- Bendigo Bank: Bendigo Bank’s Bendigo Complete Home Loan allows up to six offset facilities per loan account.
- Qudos Bank: Qudos Bank allows multiple offset accounts on eligible loans.
- Athena: Through their “Power Up” variable home loan product, Athena lets you create up to 10 free offset accounts called “Cash Stashes” in addition to your primary offset account.
- ME Bank: ME Bank allows up to eight offset accounts linked to their Flexible Home Loan.
- Suncorp Bank: Suncorp Bank’s multiple offset accounts are available through their Everyday Options Accounts and linked Sub-account balances.
- Beyond Bank: Beyond Bank offers multiple Mortgage Offset Accounts through any qualified Beyond Bank home loan.
- St. George Bank: St. George Bank allows up to 99 offset accounts linked to a mortgage.
- Great Southern Bank: Great Southern Bank offers multiple offset accounts with their Offset Variable Home Loan.
- AMP Bank: AMP Bank has various home loans with the provision for up to 10 offset accounts.
- Bank of Melbourne: The Bank of Melbourne allows up to 99 offset accounts connected to a home loan.
- Auswide Bank: Auswide Bank offers up to 10 offset accounts on any qualified loan.
- Homestar Finance: Homestar offers up to four offset accounts through their Star Classic Home Loan.
- UBank: UBank’s Flex variable home loan can have multiple Spend, Bills and Save accounts operating as interest offset accounts.
Banks that Do Not Offer or Advertise Multiple Offset Accounts
You might see the following in online lists of Australian banks that offer multiple offset accounts. However, as of writing, they do not seem to provide the said products.
- Bank Australia: Their website currently does not mention multiple offset accounts. Their Premium Home Loan Package and Eco Clean Energy Home Loan both offer mortgage offset; however, according to the loans’ pages, “A limit of one mortgage offset account applies to Fixed Rate Loans.”
- Adelaide Bank: Adelaide Bank offers offset accounts, but nothing on their website states that they offer multiple offset accounts.
- The Mutual Bank: The Mutual Bank’s website also does not mention multiple offset accounts.
Other Things to Note
Below are additional points worth noting about two other financial institutions in Australia:
- 86400: While this bank might be mentioned in lists of banks providing offset accounts, be advised that it is no longer operational. It was acquired by NAB and integrated into NAB’s digital banking platform, Ubank.
- Barefoot: Barefoot might be mistaken for a bank, but it is actually not. Barefoot, more commonly known as “Barefoot Investor,” primarily provides financial advice rather than directly offering banking products or recommending certain banking services. Nevertheless, it’s important to note that Barefoot Investor often recommends ING or other banks that provide competitive features for their customers.
Key Considerations
Below are a few additional points you need to know about multiple offset accounts:
Maximising Offset Benefits
The more savings you have in your offset accounts, the more interest reductions you can enjoy on your mortgage. By depositing funds that are not immediately required, you can significantly reduce interest charges, save money, and potentially shorten your loan term.
Multiple Accounts, Multiple Offsets
The option for multiple offset accounts is not always offered in home loans. Typically, this feature is available with variable loans, although some fixed loans also offer offset accounts. Check with your lender for specific terms, as some offer partial offset or subaccounts.
Personalised Financial Strategy
Every borrower’s situation is unique. It’s important to seek professional advice before making changes to your loan structure. A qualified mortgage broker can guide you, considering your circumstances and financial goals.
Final Thoughts
By understanding how multiple offset accounts work and which banks offer multiple offset accounts in Australia, you can take greater control of your mortgage.
Incorporating multiple offset accounts into your mortgage strategy can provide increased financial flexibility, maximise offset benefits, and enhance financial security. While this approach may not suit everyone, it is a valuable strategy if you’re seeking efficient financial management and faster mortgage repayment.
Thinking about using multiple offset accounts? Consult a trusted mortgage broker, such as Unconditional Finance, to tailor your loan structure to your unique financial situation and goals.
