Customers can link one or multiple (unlimited) deposit accounts to a loan account as "offset account(s)." The balance(s) on the offset account(s) reduces the outstanding principal balance of the loan account for interest calculation purposes.
Offset account functionality is only available for loans in a variable interest rate period.
At least one of the offset accounts' holders needs to be borrower of the loan account.
Offsets can be linked or de-linked on active loan accounts.
It allows borrowers to repay as much as they can in order to save interest, whilst still having access to the amounts prepaid in times of need. Multiple offset accounts are relevant so that customers can segment their savings into accounts that are more or less accessible (e.g. have a card attached or not, joint accounts etc.).