Is Your Offset Working? Check the Link, Interest and Fees

An offset works only when the account and eligible loan are correctly linked and the interest calculation applies the agreed benefit. Having money in a transaction account at the same bank is not enough. ASIC’s 2026 review found weaknesses in how eight banks set up, monitored and managed offsets.1

ASIC reports more than $55 million in compensation for failures reported between September 2023 and August 2025. That figure describes reported failures and compensation across the review context; it is not proof that every borrower has been overcharged.1

Yan’s August script gives a memorable check. Translated from Chinese: was it established, is it linked, and has the interest reduced?

Check what the account actually is

Read the loan and account documents. Confirm that the account is an offset for the relevant loan product and identify whether its benefit is full or partial under the product terms. An account nickname or an application request is not sufficient evidence that the benefit is operating.2

Record the offset account identifier, loan identifier and effective date. With split loans, confirm which split receives the benefit. After refinancing, changing products or restructuring accounts, request fresh confirmation instead of assuming the previous link survived.

Check the interest, not just the repayment

Moneysmart explains that an offset reduces the loan balance on which interest is calculated. The repayment may stay the same while more of it reduces principal.2 That means an unchanged monthly payment does not demonstrate failure, and a normal direct debit does not demonstrate success.

Compare the bank’s stated calculation with daily balances and the applicable rate and dates. If the account does not make the benefit visible, ask the lender for the calculation. A rough estimate can identify a question, but the historical reconciliation needs the actual balance movements and loan terms.

Compare savings with the total product cost

An offset can carry fees or be attached to a different interest rate. Consider the balance you realistically keep there and compare the complete loan cost, not an idealised balance that never occurs. A product with an offset is not automatically the cheapest product for every borrower.

If considering refinancing, include switching costs and the remaining loan term.3 Extending the term can lower repayments while increasing the period of interest payments. Compare like with like and ask the broker to explain the trade-offs and remuneration where you use one.4

Distinguish offset, redraw and repayment structure

An offset is an account arrangement; redraw is access to eligible extra repayments under loan terms. Their operation and tax consequences should not be assumed identical. For an investment or mixed-purpose loan, obtain advice before moving money based on a generic social-media example.

Also identify whether the loan is principal-and-interest or interest-only, and when its repayment structure changes.5 Keep principal reductions separate from interest savings in your records. Our cash-flow, equity and profit guide explains why these amounts should not be counted twice.

Ask four questions in writing

Send the bank a concise request:

1. Which offset account is linked to which loan or split?
2. From what date did the linkage and offset benefit take effect?
3. What benefit has been applied to interest over the period in question?
4. If there was an error, how will historical interest and consequential amounts be reviewed?

Preserve account records, product-change dates and responses. Avoid sending unnecessary full credentials or login details. If you identify a problem, make a formal complaint and state the period and outcome you want reviewed.

Use the complaint process if the answer is unresolved

Moneysmart recommends raising the issue with the financial firm and keeping records of the complaint.6 ASIC’s RG 271 describes internal dispute-resolution obligations for relevant financial firms.7 If the matter remains unresolved, AFCA provides an independent financial dispute-resolution avenue, subject to its rules.8

This is a practical verification task, not a reason to move funds urgently without understanding the product. Begin with the documents and a written reconciliation. For broader purchase decisions, connect the loan budget to property due diligence, OC expenses and any planned building costs.

Questions buyers ask

My monthly repayment has not fallen. Is the offset broken?

Not necessarily. The repayment may remain unchanged while less goes to interest and more reduces principal. Check the actual linkage and calculation.

Does every account called “offset” reduce every loan I have?

No. Verify the product terms and the specific linked loan or split, including the effective date.

What if the bank cannot explain historical interest?

Keep the records, request a written reconciliation and use the formal complaint process. If unresolved, consider AFCA under its applicable rules.

Source videos and verification scope

This article develops practical questions raised in the published videos below and checks them against the sources cited here. Case prices, forecasts and broad claims in a video do not establish the result for another property.

• Aussie Offset Failing? Are You Affected?