The concept behind this type of loan is that as the banks calculate the interest on your loan daily, any "additional" money you have in your home loan (i.e. your salary or savings) is considered to be paid off your home loan, thus reducing the amount of interest charged. This can save the borrower considerable time and money on their home loan.

It's important to note that these funds can be accessed at any time. A standard home loan, with a 100% offset account will have exactly the same result.