What is an offset account and how does it work?

Which home loans are eligible for an offset account?

At BOQ Specialist, an offset account may be available through our Home Loan Banking Package on eligible Variable Rate home loans. Offset accounts are not available on Fixed Rate loan accounts, Line of Credit facilities or Plus Loans.

Offset availability depends on your home loan product, package, loan structure and BOQ Specialist’s lending requirements. We may allow multiple offset accounts, subject to approval.

If you have split loans, multiple offsets or fixed and variable loan components, eligibility may differ.

Only one offset account can be linked to one loan account at any one time.

Refer to your loan documentation or contact BOQ Specialist for assistance.

Who can hold an offset account?

An offset account must generally be held in the name of one or more of the borrowers on the linked eligible home loan.

For example, if two people are joint borrowers on a home loan, an offset account held by one or both of those borrowers may be eligible to be linked.

For company borrowers, the offset account holders must be the same as the borrowers on the home loan.

How does an offset account work?

The balance held in your linked offset account reduces the amount of your home loan balance on which interest is calculated.

BOQ Specialist calculates an offset benefit each day based on the closing balance of your linked offset account and the daily interest rate applicable to your home loan. This offset benefit is then deducted from the interest that would otherwise be charged on your home loan for the interest period.

Offset Account daily closing balance × annual interest rate applying to your home loan ÷ 365 days

For example, if your variable rate home loan balance is $500,000 and you have $20,000 in your linked offset account, the offset benefit is generally the same as paying interest on $480,000 instead of $500,000.

This can help reduce the interest charged on your home loan and potentially help you pay off your loan sooner.

If the balance of the offset account is greater than the amount owing on the loan, no additional offset benefit is received for the excess. You also do not earn interest on funds held in your offset account while it is operating as an offset account. Any interest offset benefit will not apply if your offset account is in overdraft.

You can also use our offset calculator to estimate how maintaining money in your offset account could affect how your interest is charged.

When will my offset account start working?

Your offset benefit generally starts when:

1. your eligible home loan has settled
2. the offset account is open and active
3. the offset account has been successfully linked to the eligible loan or loan split
4. cleared funds are held in the offset account.

If you open or request an offset account after settlement, the benefit generally starts after the account has been successfully linked and any required processing has been completed.

If you've recently settled your loan, there may be a short period before your offset details are reflected in your communications and statement information.

How can I check whether my offset account is linked and working?

To check the arrangement yourself:

1. review your welcome letter, your latest home loan statement for offset benefit information or bundling variation letter.
2. confirm the offset account details match the account you intended to link.
3. if you have multiple loan splits, confirm the offset is linked to the intended eligible split.

If the information does not match your instructions, contact BOQ Specialist.

If you already have an eligible home loan and would like an offset account, contact BOQ Specialist to discuss your eligibility and available options.

Not all loan products or loan structures are eligible for offset functionality. If an offset account was not established when your loan was opened, a new offset account may need to be applied for and approved.

Why is my offset benefit different from what I expected?

Common reasons include:

• funds were deposited part way through the month
• money was withdrawn from the offset account
• the offset balance changed during the period
• funds had not yet cleared
• your loan balance changed
• your interest rate changed
• a recent loan or offset request was still being processed
• the offset account was linked part way through the period
• the offset was linked to a different eligible loan split.

Offset benefits are calculated using daily balances, so the amount saved can vary from month to month.

How do offset accounts work with split loans and loan changes?

If your home loan has multiple loan splits, each offset account can only be linked to one eligible loan account at a time. Not all loan accounts within a home loan structure may be eligible for offset functionality.

If you refinance, restructure your loan, convert loan types or create a new loan split, your offset arrangement may be affected. After any loan change, check:

• your offset account remains open and active
• the correct offset account is linked
• it is linked to the intended eligible loan or loan split
• the offset benefit appears on your next available statement.

My offset account doesn't appear to be working. What should I do?

Before contacting BOQ Specialist, check:

• the offset account is open and active
• the account contains cleared funds
• your home loan or loan split is eligible for an offset
• your welcome or variation letter confirms the correct account details
• your latest home loan statement
• whether you've recently requested an offset, refinanced or changed your loan structure.

If you're still concerned, contact BOQ Specialist for assistance.