Mortgage Offset Calculator
See how much an offset account could save on your home loan. Money in the offset reduces the balance you’re charged interest on, so — with the same repayment — you pay less interest and clear the loan sooner.
Result
Estimate- Interest saved
- $207,965.32
- Time saved
- 4y 1m
- Loan paid off in
- 25.92 yrs
- Estimate only — your repayment is assumed to stay constant so the interest you save pays the loan off sooner. Real offset interest usually accrues daily and your balance will vary.
- The money in your offset account is still yours — it isn’t a cost. The figures above are the interest it saves, separate from the cash itself.
Loan balance each year — with vs without offset
| Year | With offset | No offset |
|---|---|---|
| 1 | $688,320.03 | $691,403.92 |
| 2 | $675,919.66 | $682,277.65 |
| 3 | $662,754.46 | $672,588.49 |
| 4 | $648,777.27 | $662,301.73 |
| 5 | $633,937.99 | $651,380.50 |
| 6 | $618,183.46 | $639,785.67 |
| 7 | $601,457.22 | $627,475.70 |
| 8 | $583,699.34 | $614,406.48 |
| 9 | $564,846.20 | $600,531.18 |
| 10 | $544,830.24 | $585,800.07 |
| 11 | $523,579.73 | $570,160.39 |
| 12 | $501,018.55 | $553,556.09 |
| 13 | $477,065.83 | $535,927.66 |
| 14 | $451,635.77 | $517,211.96 |
| 15 | $424,637.23 | $497,341.91 |
| 16 | $395,973.49 | $476,246.32 |
| 17 | $365,541.82 | $453,849.60 |
| 18 | $333,233.20 | $430,071.50 |
| 19 | $298,931.86 | $404,826.82 |
| 20 | $262,514.88 | $378,025.10 |
| 21 | $223,851.78 | $349,570.31 |
| 22 | $182,804.03 | $319,360.50 |
| 23 | $139,224.54 | $287,287.40 |
| 24 | $92,957.17 | $253,236.11 |
| 25 | $43,845.91 | $217,084.61 |
| 26 | $0.00 | $178,703.36 |
| 27 | $0.00 | $137,954.85 |
| 28 | $0.00 | $94,693.05 |
| 29 | $0.00 | $48,762.96 |
| 30 | $0.00 | $0.00 |
How this is calculated
- Interest is charged on the loan minus the offset
(balance − $50,000.00) × 6%Each period you’re charged interest only on the part of the loan the offset doesn’t cover.
- Repayment stays the same
Because less goes to interest, more of each repayment pays down the principal — so the loan clears early.
- Interest saved vs no offset$207,965.32
- Loan paid off in25.92 years
About 4y 1m sooner than with no offset.
Assumptions
- Loan of 700000 at 6% p.a. over 30 years, repaid monthly.
- A constant 50000 held in the offset account for the life of the loan.
- Repayment kept constant at the standard principal-and-interest amount.
- No offset account fee.
Worked example
Keep $50,000 in an offset against a $700,000 loan at 6% over 30 years, and you’re charged interest on only $650,000. Keeping the repayment the same, that saves roughly $200,000 in interest and clears the loan about four years early — and the $50,000 is still yours the whole time.
Official sources
- ASIC Moneysmart — offset accountsAn offset account reduces the interest charged on your home loan.
Frequently asked questions
How much will $50,000 in an offset account save?
On a $700,000 loan at 6% over 30 years, keeping $50,000 in an offset account saves roughly $200,000 in interest and cuts about 4 years off the loan — if you keep the repayment the same and the balance stays there the whole time. (A permanent offset works much like having made a $50,000 lump-sum repayment, except the cash stays yours.) Your own numbers above give a tailored estimate.
What’s the difference between an offset account and redraw?
Both reduce the interest you pay, but they work differently. An offset is a separate everyday account whose balance is netted against your loan each day — your cash stays liquid and accessible. Redraw is money you’ve already paid onto the loan that you can pull back out; access can be subject to lender conditions. This calculator models an offset balance.
Is an offset account worth the annual fee?
It depends on your balance. The interest an offset saves is roughly your average balance × your rate. So the fee breaks even at about annual fee ÷ rate — for a $395 fee at 6%, that’s around $6,600. Keep more than that in the offset and you’re ahead; keep less and a basic loan may be cheaper. The calculator shows your breakeven and net saving.
Does the offset balance cost me anything?
No — the money in your offset account is still yours and stays available. It simply isn’t earning interest for the bank against your loan. The savings shown here are the loan interest it avoids, which is separate from the cash itself.
Why might my real savings differ?
Real offset interest usually accrues daily on your actual balance, which rises and falls as money comes in and out. This calculator uses a constant average balance and a periodic calculation, and assumes you keep the repayment the same. Treat it as a close guide, not an exact figure.
Related calculators
Reviewed 1 November 2026. Estimate only — real offset interest usually accrues daily on a balance that varies. Not a loan offer or financial advice.