An offset account is, simply, a savings account that is connected to your home loan. The money you place in this account counts towards your mortgage, and therefore reduces the amount of interest that you have to pay. The offset account also functions like a normal savings account, with the money being accessible by ATM and EFTPOS.
A 100% offset account means that the same interest is earned in the savings account as is paid in the mortgage account, whereas a partial offset account means that a lower interest is earned than is paid. So, a 100% offset account is usually a better deal, although many banks will offer them only with certain loans.
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