Home Loan Offset Calculator

How a home loan offset account works

A home loan offset account is a transaction account linked to your mortgage. The balance in your offset account is deducted from your outstanding home loan balance before interest is calculated each day. You still make the same minimum repayment, but more of each payment goes toward the principal and less toward interest. Over time, this means you pay off your loan faster and pay significantly less total interest.

For example, with a $600,000 loan and $50,000 in your offset account, you only pay interest on $550,000. On a 30-year loan at 6%, this single change can save you approximately $95,000 in interest.

How offset interest savings are calculated

This mortgage offset calculator uses the standard amortisation formula to simulate your loan payoff with and without an offset balance. For each payment period, interest is calculated on the effective balance (loan balance minus offset balance). The calculator then compares the total interest and loan term against a base scenario with no offset to show your savings. This approach gives you a realistic estimate, though actual savings may vary based on your lender's daily interest calculation method.

Offset calculator vs standard repayment calculator

A standard home loan repayment calculator focuses on calculating your regular repayments based on loan amount, rate, and term. This offset account calculator goes further by modelling the impact of maintaining an offset balance over the life of your loan. It shows you the interest saved, time saved, and how your amortisation schedule changes when offset is applied. If you want a broad overview of your mortgage, use the repayment calculator. If you specifically want to see how your savings account balance can reduce your home loan cost, this is the right tool.

Offset account vs extra repayments

Both offset accounts and extra repayments reduce the interest you pay, but they work differently:

• Offset accounts keep your money accessible — you can withdraw it anytime for expenses, emergencies, or opportunities. Your minimum repayment stays the same, but interest is calculated on a reduced balance.
• Extra repayments directly reduce your loan balance. While some loans allow redraw, the money may not be as freely accessible, and some fixed-rate loans restrict or penalise extra repayments.

For a detailed comparison, see our guide: Offset vs Extra Repayments — Which Saves More?

Offset account vs redraw facility

Both reduce the balance on which interest is charged, but they differ in accessibility and flexibility. An offset account keeps your funds separate in a transaction account — you can spend, transfer, and receive salary into it like a normal bank account. A redraw facility lets you access extra repayments you've made on your loan, but withdrawals may take longer to process and some lenders restrict access. Offset accounts are generally preferred by borrowers who want their savings working for them while remaining fully liquid.

When is an offset account worth it?

An offset account is most beneficial when:

• You maintain a meaningful balance (e.g., $10,000+ consistently)
• You have a variable rate home loan (full offset is rarely available on fixed rates)
• Your loan amount is large enough that the interest savings outweigh any offset account fees
• You value flexibility — keeping funds accessible rather than locked into extra repayments

Some lenders charge a monthly fee ($10-$15/month) or a higher annual package fee for offset accounts. Use this calculator to check whether the interest savings exceed those costs for your situation.

Fixed vs variable loans and offset accounts

Full 100% offset accounts are almost exclusively available on variable rate home loans. Some lenders offer partial offset on fixed-rate loans (typically capped at $10,000-$50,000), but this is not common. If offset functionality is important to you, consider a variable rate loan or a split loan structure — where part of your loan is fixed (for rate certainty) and part is variable (with full offset). This gives you the best of both worlds.