Thanks. Did you mean look for mortgages WITHOUT pre-payment penalties?
An offset account isn't part of the mortgage. It's a separate account but anything in it is offset against the mortgage. So, for example, if I owe $100,000 and have $40,000 in my offset account I only pay interest on $60,000. The money in the offset account is just my money, so I can transfer it wherever I want. Say I decide to transfer $10,000 to my credit card I'd then be paying interest on $70,000 of the $100,000 I owed. So, lets say I want to buy a property worth $300,000 (which won't get you much in Australia) and I have $100,000 I might decide to borrow $250,000 put in $50,000 of my own and put $50,000 in an offset account. That way I'm only paying interest on $200,000 but that $50,000 is still there if I decide I want it for something else, it's not tied up in the mortgage in the same way it would be if I'd only borrowed $200,000 and put $100,000 of my own into the house.