Mortgage Offset Calculator
Estimate how an Australian mortgage offset account can reduce home-loan interest and shorten the loan term. Compare results with and without an offset.
Your results
Calculation breakdown
- Effective balance
- $600,000.00 loan − $50,000.00 offset = $550,000.00
- First-period interest with offset
- $550,000.00 × (6% ÷ 12) = $2,750.00
Assumptions
- The offset account balance is not a loan repayment — it stays fully accessible to you at any time.
- Interest is calculated daily on the loan balance less the offset balance in practice; here it is modelled per repayment period.
- Interest rate and repayment amount are assumed constant over time.
- Monthly additions to the offset are converted to an equivalent amount for the selected repayment frequency.
- Both scenarios must repay the loan within the entered remaining term before savings are shown.
Embed this calculator on your websiteCopy a responsive, branded widget that always uses CalcAussie's current calculator.
Paste this HTML where you want the calculator to appear. The widget includes CalcAussie branding plus links to the complete calculator and privacy information.
How this calculator works
Money in an offset account reduces the balance your interest is charged on without being a repayment. This calculator simulates the loan period by period so you can see the first-period interest saving and the shortened loan term.
How a 100% mortgage offset account saves interest
A 100% offset account reduces the home-loan balance used for the interest calculation. If a loan balance is $500,000 and the offset holds $40,000, interest is generally calculated on $460,000 while the offset balance remains accessible.
The calculator compares the loan with and without the entered offset balance using the same rate and repayment assumptions. The difference shows estimated interest saved and any reduction in the loan term.
Compare the benefit with fees and a redraw facility
An offset feature may come with a higher interest rate, package fee or account conditions. Compare the annual interest benefit with those extra costs, and confirm whether the lender offers a full or partial offset.
Extra repayments and redraw can also reduce interest, but access rules, account ownership and tax treatment can differ. Ask the lender how its product works before moving a large balance or relying on the projected saving.
Official sources and assumptions
Check the official or authoritative references used to review this calculator's rates, formulas and assumptions.
Frequently asked questions
Is offset better than a savings account?
Usually, because the benefit is effectively tax-free — you avoid interest rather than earning taxable interest.
Does the offset balance pay down my loan?
No. It only reduces the interest-bearing balance. Your money stays yours and stays accessible.
Do offset accounts cost anything?
Many loans with an offset facility charge a higher rate or an annual package fee.
Content responsibility
Maintained by CalcAussie and last updated 30 September 2026. Checks applied: calculation method, worked examples, Australian terminology, material assumptions, official references where an external rule applies, and user-facing limitations.
Calculator results remain estimates based on the figures entered. Check material decisions against current official information and report a suspected error so it can be reproduced and corrected.
Results are estimates only and are not financial, tax, legal or credit advice.