Offset Accounts and Net Worth: How to Count Them
Count the money in your offset as a cash asset, and count your full mortgage balance as a liability. Don't net them off against each other.
Your total net worth comes out the same either way. But how you record it changes what your numbers can tell you.
Why it's confusing
An offset account sits against your home loan. The balance reduces the interest you're charged, and some lender apps even show an "effective loan balance" with the offset already subtracted.
So it feels like the money is part of the mortgage. It isn't. It's an everyday account holding your money. You can spend it tomorrow.
The clean way to record it
- Asset: your offset balance, tracked like any other cash account
- Liability: your full mortgage balance, before any offset
The subtraction happens when you calculate your net worth, same as everything else.
Why not just subtract it from the loan?
Because you lose information. If you record a $400,000 loan with $50,000 in offset as a single "$350,000 mortgage", two different things now look identical: paying down principal and saving cash.
Those are not the same. The $50,000 in offset is money you can use for an emergency, a renovation, or a move. Principal you've paid off is not. Netting them together hides how much accessible money you actually have, and it muddies your trend when you move cash between accounts.
What about redraw?
Redraw is the one that trips people up. Extra repayments sitting in redraw have actually reduced your loan balance, and the bank controls your access to them. So redraw is simpler: just record whatever your lender says the loan balance is.
The rule of thumb: offset money is yours, so it's an asset. Redraw money has already gone into the loan, so it shows up as a smaller liability.
Offset money is still your money. Track it as cash, and let the mortgage be the mortgage.
Recording your offset and mortgage as separate lines each month help you better understand where you and your property are at.