Offset loans work by deducting your daily offset account balance from your loan balance, then charging interest on the difference. For example, if you have a $100,000 loan and have $20,000 in your offset account, you pay the interest on $80,000.
If you are paying principal and interest your repayments won’t change if you have money in offset, but you will pay your loan off quicker due to the reduced interest charge. If the loan is interest only it will reduce your monthly interest charge. Offsets are a great tool for paying your loan off faster, and for the live-in investor they are a great way to preserve your debt and gearing whilst receiving benefits as if you had paid your loan out.