Yes, the primary objective of an offset account is to reduce the principle owing on your house loan. An offset account is a type of transaction account that the lender has linked to your mortgage, and any funds entered into it are applied to your mortgage principle.
Assume you owe $400,000 on your mortgage and put $50,000 in your offset account. In a 100 percent offset account (more on this later), this means you’ll only be paid interest on the $350,000, decreasing the time and overall cost of the loan by charging you interest on a smaller amount. The more money you keep in an offset account, the less interest you’ll pay on the loan.