100 per cent offset accounts are a separate savings account attached to your home loan. The interest rate on the offset account is the same as that on the loan. Any money you put in the offset account is deducted from your loan balance before interest is calculated.

All in one loans allow you to deposit all of your income into the loan account, and then to draw upon some of this money to make routine purchases and other day to day transactions.

The longer the excess funds remain in your loan account, the greater the interest savings.

The 100% offset account operates like a transaction account and typically has a cheque facility and a cash card. The interest savings on 100 per cent offset accounts/All-in-one loans are higher than you would get on other savings and transaction accounts.

Any extra money in your transaction account saves you interest on your loan, thus shortening the term of your loan. The interest rate on your 100 per cent offset account may be slightly higher or have some additional monthly fees, however the savings experienced by clients using these products more than make up for the extra costs.

Some lenders will require that you hold a minimum balance, such as $2,000, in the offset account for the offset effect to be calculated.