How do I create a Loan Offset Account?

Sally-Anne Layman

Is there any way that you can create a 100% offset account against a property loan? 

Diane Lucas_6448176

Hi Sally-Anne I think that more detail/information is required to be able to answer this question. Typically loan accounts (eg interest only) would have the interest expense being transferred in from another associated bank account. The Interest expense is then written against the loan account - balance is the Loan amount. Not sure what you mean by 100% offset.
Thanks
Diane

Sally-Anne Layman

An offset account is a savings account that offsets the balance of the loan. Effectively you only pay interest on the daily net balance of the accounts (ie loan balance - offset account balance). For example, if you offset account has $20,000 in it and your loan balance is $100,000 then you pay mortgage interest on only $80,000. The net balance is calculated daily as the offset account balance fluctuates.

Diane Lucas_6448176

Thanks for the clarification. I would set it up as a normal bank account. If you pay something into the account this is represented with a transfer entry from where ever it came from. Any expense charges against the offset account are entered as normal. The interest expense would be entered against the account it is charged against (offset or loan). If you do all of that then your accounts should all balance/reconcile.