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According to Money.com.au, 57 per cent of Australians have never confirmed that their offset account is properly attached to their mortgage, despite an ongoing ASIC investigation into potential mislinking across eight major lenders.
The financial comparison site warned that an incorrectly linked offset account could cost borrowers more than $111,000 in extra interest over a 30-year loan term, based on a $600,000 mortgage at 5.50 per cent.
Money.com.au mortgage expert Debbie Hays said many borrowers wrongly assume their lender automatically links their offset account to their loan, leaving them exposed to costly errors.
“We recently had a homeowner who received an inheritance and deposited $340,000 into their offset account, only to discover 12 months later that the account wasn’t actually linked to their variable home loan,” she said.
“The interest savings they thought they were getting weren’t in place at all. It’s just lucky they caught it early and not 10 years down the track.”
The research also showed that 10 per cent of borrowers believe their offset is linked automatically, while just a quarter have checked and confirmed that it is connected correctly.
Nine per cent of Australians have discovered their offset was not linked, potentially costing them thousands in additional interest before rectifying the issue.
Older Australians were found to be the least likely to check their offset account, with 69 per cent of Baby Boomers admitting they had never confirmed the link, compared with 47 per cent of Millennials.
Hays said that most offset errors stem from administrative mistakes, refinancing changes, or data mismatches within lender systems.
“Offset mislinking can happen for a range of reasons ranging from administrative errors to account changes during refinancing, but it’s ultimately the borrower who pays the price,” she said.
“Lenders need to ensure their systems are set up properly, but borrowers also have a responsibility to double-check. A quick look at your loan statement or internet banking could save you a lot of money.”
Money.com.au advised borrowers to log in to their online banking to confirm their offset appears under their “Mortgage Offset” or “Linked Accounts” tab.
Hays said mortgage holders who discover an error may be entitled to a refund of extra interest paid, depending on lender policies and how long the issue went undetected.
“If they don’t, you can escalate the matter by lodging a complaint with your lender’s internal dispute resolution team and if it remains unresolved, it will proceed through to AFCA for review,” she said.
The research follows ASIC’s probe into the banking sector to determine whether customers are receiving the full benefits of their offset accounts, amid concerns that systemic mislinking could be widespread.