Offset sub-accounts explained
Last updated: 06 October 2025 | Estimated read time: 3 Minutes
Heard of offset sub-accounts but not quite sure how they work? You’re not alone. We’re here to make it simple.
An offset sub-account (also known as an offset account or offset feature) is a handy tool that could help you reduce the interest you pay on your home loan and potentially pay it off faster.
How does an offset sub-account work?
An offset sub-account is linked to your home loan. Any money you keep in this account is offset against your loan balance, which means you’re only charged interest on the difference.
Example: If your home loan balance is $200,000 and you have $2,000 in your offset sub-account, you’ll only be charged interest on $198,000. Your minimum monthly repayments stay the same, so you could save on interest and reduce your loan term over time.
Did you know? A 100% interest-free offset sub-account can be added to any of our variable rate home loan options.
Offset sub-account vs Repayment offset account?
Some lenders offer repayment offset accounts, which reduce your minimum monthly instalment. At Pepper Money, we offer offset sub-accounts, which means your scheduled repayments stay the same, helping you pay off your loan faster.
Using your offset sub-account.
You can use your offset sub-account like an everyday account:
- Have your salary paid directly into it
- Deposit lump sums (up to your loan balance)
- Use it to reduce your interest charges daily
If you miss a home loan repayment, funds in your offset sub-account may be used to cover it — typically within 14 days. If the account becomes overdrawn, your lender may use funds from other linked accounts to clear the balance.
Visa Debit card access
With a Pepper Money offset sub-account, you can choose to add a Visa Debit card for easy access to your funds. You can:
- Withdraw up to $1,020 in cash per card, per day
- Spend up to $5,000 per day (if funds are available)
- Use Visa payWave® for everyday purchases
These limits are shared across all cardholders on the account.
Are there any fees?
There are no monthly fees for Pepper Money’s 100% offset sub-account, and no charge for issuing your Visa Debit card.
However, fees may apply for:
- Lost or replacement cards
- Overseas transactions
- ATM withdrawals (depending on the provider)
How could an offset sub-account work for you?
If you’re looking for a flexible way to reduce interest and pay off your home loan faster, an offset sub-account could be a smart option. It’s a simple feature that works in the background, helping you make the most of every dollar.
We’re here to help
Contributor | Barry Saoud, General Manager, Mortgages and Commercial Lending
Barry joined Pepper Money in July 2021 as General Manager, Mortgages and Commercial Lending. He is responsible for the strategic direction and operating performance across product, credit, and settlements for mortgages, commercial loans, personal loans, and direct sales. Read more.
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