Offset facility

What is an Offset facility?

A mortgage Offset facility is an eligible transaction account linked to an eligible home loan account. Instead of being charged interest on the full loan balance, interest is charged on the loan balance minus the balance in the Offset account. Read on to see how an Offset facility works, plus more.

Making fortnightly versus monthly repayments

You can further shorten the time it takes you to repay your home loan by making fortnightly home loan repayments, as well as using the 100% mortgage offset facility. Paying fortnightly allows you to make the equivalent of one extra monthly repayment per year. The following scenario gives you an idea of how this works.

Pay your home loan off faster

When you apply for a home loan with Health Professionals Bank you can also apply to link an Everyday Direct account to this home loan, creating a 100% Offset facility. Using this, instead of being charged interest on the full loan balance, interest is charged against the full home loan balance minus the balance of your 100% Offset facility.

Home loans eligible for the Offset facility

100% offset is available exclusively through the Your Way Plus Home loan package on:

• Fixed and variable loan types
• Owner Occupier and Investor home loans
• Principal and interest loans
• Interest only loans

Please note: Each home loan may only have one Everyday Direct account linked to it as an Offset facility. No other transaction accounts may be linked to the same loan as Offset facilities. You may have more than one home loan and a separate Everyday Direct account can be linked to each of your home loans (for example an Everyday Direct account may be linked to your first home loan and a second Everyday Direct account linked to your second home loan).

How interest is calculated

• Offset is calculated daily and applied monthly.
• Where Everyday Direct account credit balance exceeds home loan debit balance, the Offset amount can only be for the total of the home loan debit balance. That is the Offset benefit cannot exceed the debit balance of the home loan.

How account ownership works with an Offset facility

Possible scenarios in which you can attach an Everyday Direct account to a home loan account for Offset purposes:

• A single Everyday Direct account to a single home loan account where the same person is the owner of both (i.e. the party is both the account holder and borrower).
• A single Everyday Direct account to a joint home loan where the owner of the Everyday Direct account is one of the owners of the joint home loan  (i.e the party is the account holder and one of the borrowers).
• A joint Everyday Direct account to a joint home loan account, where all of the owners of both accounts are the same (i.e. the parties are both the account holders and borrowers).

Possible scenarios that are not permitted for attaching an Everyday Direct account to a home loan account for Offset purposes:

• An Everyday Direct account that is not owned by an owner of the home loan account cannot be linked to the home loan account.
• A joint Everyday Direct account cannot be linked to a single home loan account, regardless of whether the owner of the home loan account is one of the owners of the joint Everyday account.

Important information: The Australian Tax Office requires Offset facilities to be set against accounts that are owned by the same person or persons. This means that person A cannot have their home loan offset by a transaction account owned by person B. However, if person A and B own a home loan together, (i.e. the home loan is in joint names) either one may have their individual transaction account linked to their joint home loan.

How an Offset facility is calculated

Here are some examples of how an Offset facility can work for you:

Example A

This example assumes that, on one particular day, the following facts apply in relation to a member's accounts:

(a) a home loan account with a debit balance (dr) of $100,000;
(b) a linked Everyday Direct account with a credit balance (cr) of $10,000; and
(c) an interest rate of 6% per annum applying to the home loan.
(d) the Offset percentage is 100%.

The balance of your linked Everyday Direct account ($10,000 cr) is offset against the balance of your home loan account ($100,000 dr).

The result, the Offset balance, is $90,000 dr:

For the purposes of charging interest, the balance of the home loan account loan is split into two portions:

• the first portion is an amount equivalent to the credit balance of your Everyday Direct account;
• the second portion is the Offset balance.

And, in charging interest:

• on the first portion, the interest rate is reduced by 100% (to a zero interest rate) and;
• on the second portion, the Offset balance, we charge the usual interest rate applying to your home loan.

The calculation and the result are as follows:

Please note: The above is an example only. Interest rates may change at any time and we may change the Offset Percentage at any time upon notice to you.

Example B

This example assumes that, on a particular day, the following facts apply in relation to a member’s accounts:

(a) a home loan account with a debit balance (dr) of $7,500;
(b) a linked Everyday Direct account with a credit balance (cr) of $10,000; and
(c) C. an interest rate of 6% per annum applying to the home loan;
(d) the Offset percentage is 100%.

The balance of your linked Everyday Direct account ($10,000 cr) is offset against the balance of your home loan ($7,500 dr). The result, the Offset balance is $2,500 cr.

The interest rate applying to the home loan account balance ($7,500) is reduced by the Offset Percentage which, in this example, is 100% of the home loan rate and the debit balance owing on your home loan is reduced by the equivalent amount from your linked transaction account. No interest is paid by us on the credit balance of the linked transaction account.

Which products are eligible for the Offset facility?

• Your Way Plus Owner-Occupier or Investment Home loans
• Everyday Direct accounts

Can I have a redraw and an Offset facility?

Yes, you can have both a redraw facility and an Offset facility.

How many offset accounts can I have?

You can have as many Offset accounts as you have home loans. However, only one Everyday Direct account can be linked to one loan.

Is there a minimum or maximum loan amount in order to qualify for the Offset facility?

No, there are no restrictions on the loan amount to qualify for the Offset facility.

What is the minimum and maximum balance you can have in your Offset account?

There is no actual minimum of maximum, however if the offset account balance is zero or in debit no Offset will be calculated for those days. If the Offset account balance is greater than the loan, no Offset benefit will be calculated for the amount that exceeds the loan balance, for the days in the month the Offset balance exceeded the loan balance.

How does account ownership work?

The owner of the Everyday Direct account must be the owner of the mortgage loan, or one of the owners in the case of joint mortgage loans.

Do all of the owners of the Everyday Direct account have to be owners of the mortgage?

Yes, every owner of the Everyday Direct account must be also an owner of the mortgage.