Mortgage offset is another way to reduce your mortgage by attaching an account to the loan and using the balance to reduce interest. A mortgage offset account replaces your personal transaction account. Money can be deposited and withdrawn from the account in the same way as any other account. For this reason, it can be used to set up an "all-in-one" or salary loan. You have your salary paid straight in to an account that is linked to your mortgage but not a part of it. You can access your money in the same way you would if you still had your normal savings accounts - ATM, Eftpos, Cheque, and more recently, telephone and internet banking. 100% mortgage offset and redraw are close relatives in that they essentially achieve the same thing. You pay extra money in, allowing you to decrease the balance of your mortgage that is being charged interest. Then you can get it back again. Mortgage offset works by reducing the amount of interest charged on a loan. With 100% mortgage offset, every dollar deposited into the account means that same dollar in the loan is not charged any interest. Mortgage offset is tax effective because the account itself earns no interest thereby legally minimising taxable income. If an account is 100% offset, this means that for one dollar in your offset account, you are effectively paying no interest on that same dollar in your mortgage. Mortgage offset does not have to be offset 100%. In these cases, it may be referred as a "Loan Reducer" facility.