Myth Busting: Does Paying Weekly Help You Pay Off an Offset Loan Faster?

There’s a widespread myth in the home loan world: switching from monthly to weekly repayments will dramatically speed up the payoff of your mortgage, especially when you have an offset account.

Let’s break that down. While paying more often can make a difference with a standard loan, the strategy plays out quite differently when working with an offset account. The real breakthrough isn’t how frequently you pay, it’s how much money you keep sitting in your offset account.

Why Do People Think Weekly Payments Help?

The thinking goes like this: If you pay half your monthly repayment every fortnight, or a quarter each week, you increase your payment frequency. Over a year, this adds up to the equivalent of 13 full payments instead of 12. That extra repayment gets applied directly to your loan balance, reducing interest and helping you pay it off sooner.

This tactic works well for traditional home loans because it subtly increases the amount you contribute annually without feeling like a major financial strain.

But offset loans are a different story.

Offset Loans Work Differently

Offset accounts are effectively transaction accounts connected to your home loan. The balance in your offset account is subtracted from your loan principal when calculating loan interest,  usually daily.

So, if you have a $500,000 mortgage and $20,000 in your offset account, your lender only charges interest on $480,000. That’s $20,000 working in your favour every single day it sits there.

Even better: because you’re being charged less interest, more of your regular loan repayment goes toward reducing the principal rather than just covering the interest. This adds up over time and helps you pay off your debt sooner.

The Real Key to Paying Less Interest

If you’re serious about using your offset account to cut years off your loan, the repayment schedule isn’t your biggest priority.

What matters most? Keep as much money in your offset account for as long as possible.

Some lenders even allow multiple offset accounts linked to the same loan, which can help you structure your savings more strategically without compromising your interest-saving potential.

The logic is simple: the higher your offset account balance and the longer it stays there, the less interest you pay. The timing of your loan repayments becomes much less significant by comparison.

Want to Use an Offset Account Smarter?

Not all offset loans are created equal. Some let you link just one offset account; others allow multiple. Some include debit cards, while others may have transaction limits or restrictions on accessing funds.

If you’re unsure which type of offset loan is best for your situation or how to set up your finances to get the most benefit, we’re here to help.

Partner With Osinski Finance to Maximise Your Home Loan Strategy

At Osinski Finance, we specialise in helping homeowners and investors navigate the ins and outs of offset loans, loan structures, and repayment strategies. Whether buying your first home or refinancing an existing loan, we’ll help ensure your funds are used effectively.

Reach out today to explore your options, review your current loan, or get expert advice tailored to your financial goals.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.