Offset Account Calculator
See how much interest a linked offset account could save you on your home loan, and how much faster you could pay it off, while keeping your money accessible.
Your details
Interest you could save with this offset balance
$131,594
Repayment per month
$3,597
Total interest without offset
$695,029
Total interest with offset
$563,435
With $30,000 sitting in offset, you could pay this off in 27.0 years (3.0 years sooner), saving $131,594 in interest, while keeping the money accessible.
Assumes the offset balance stays constant for the life of the loan and your repayment stays fixed at the original scheduled amount, a growing offset balance would save even more. Doesn't account for rate changes, account-keeping fees some offset products charge, or comparing against paying the same amount directly off the loan instead. This tool provides estimates only and is not financial advice.
How to use this calculator
- 1. Enter your loan amount, interest rate and loan term.
- 2. Enter how much you'd typically keep sitting in a linked offset account.
- 3. The calculator compares total interest with and without the offset balance, and shows how much sooner you could pay off the loan.
How an offset account works
An offset account is a everyday bank account linked to your home loan. Instead of paying you interest, the balance in it is used to reduce the amount of your loan that gets charged interest. If you owe $500,000 and have $30,000 sitting in a linked offset account, you're only charged interest on $470,000. Your repayment stays the same as originally scheduled, so more of each repayment goes toward the principal instead of interest, which means you pay the loan off faster without having to find any extra money.
Offset account versus extra repayments: what's the real difference?
Mathematically, keeping money in an offset account produces a very similar interest saving to paying that same amount directly off your loan as an extra repayment. The real difference is access. Money paid directly onto your loan reduces the balance permanently and may require a redraw request (sometimes with fees or limits, sometimes not) to get it back out. Money sitting in an offset stays fully accessible like any everyday account, useful for an emergency fund or savings you might need at short notice, while still working to reduce your interest in the meantime.
FAQ
Is offsetting the same as paying extra off my loan?
The interest-saving effect is very similar, but offsetting keeps the money accessible in a normal bank account, while an extra repayment reduces your loan balance directly and may need a redraw request to access again.
Do I need a 100% offset account, or is a partial offset different?
A '100% offset' means the full balance counts toward reducing your interest, which is what this calculator assumes. Some older or introductory loan products offer a 'partial offset', where only a portion (like 40%) of your balance counts, check your specific product.
Does the offset balance need to stay the same the whole time?
No, and in reality it usually grows as you save, which increases the benefit over time. This calculator assumes a constant balance for simplicity, so it likely understates the real saving if you keep adding to it.
Do offset accounts have fees?
Some do, often bundled into a package home loan with an annual fee. Compare the fee against the interest saving, an offset is usually still worth it if you keep a meaningful, consistent balance in it.
Is an offset account better than a high-interest savings account?
Often, yes, for money linked to your mortgage. Interest earned in a savings account is taxable income, while the interest you avoid paying via an offset isn't taxed at all, which can make offsetting more effective, especially for people on higher marginal tax rates.
Money tips, straight to your inbox
Free calculators, guides and the occasional useful thing. No spam, unsubscribe anytime.
Disclaimer
Assumes the offset balance stays constant for the life of the loan and your repayment stays fixed at the original scheduled amount, a growing offset balance would save even more. Doesn't account for interest rate changes or account-keeping fees some offset products charge. This tool provides estimates only, is not financial advice, and doesn't replace advice from a mortgage broker or your lender.