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.
- Optional monthly additions to the offset are assumed to occur every repayment period.
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.
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.
Results are estimates only and are not financial, tax, legal or credit advice.