How does an offset account save money?

If you have a $500,000 loan and $50,000 in your offset account, you only pay interest on $450,000. This reduces your interest payments, helps pay off your loan faster, and can save you tens of thousands over the loan term.

Is an offset account worth it?

An offset account is worth it if you can maintain a reasonable balance. Even a small offset balance provides benefits. The higher your offset balance, the more interest you save. Compare the offset account fees against potential savings.

What is the difference between 100% and partial offset?

A 100% offset account reduces your loan balance dollar-for-dollar. A partial offset (e.g., 40%) only offsets a portion of your balance. Most major lenders offer 100% offset accounts with their variable rate loans.

Offset Account Calculator

See how much interest and time you can save with an offset account on your home loan.

Mortgage Offset Calculator

Calculate the benefits of linking an offset account to your home loan

🇦🇺 Australian Home Loans

Home Loan Details

Loan Amount ($) Your mortgage balance

Interest Rate (% p.a.) Annual interest rate

Loan Term Remaining loan term

Repayment Type

Offset Account

Current Offset Balance ($) Amount in your offset account

Monthly Savings to Offset ($) Extra monthly deposits (optional)

Your Total Interest Savings

0 years

Time Saved

Monthly Interest Saved

How Your Offset Works

$500,000

−

$50,000

$450,000

You only pay interest on the effective balance

Comparison Summary

Interest Saved

Total savings

Without Offset

Total interest

With Offset

Total interest

Monthly Payment

Same repayment

Without Offset Account

Loan Balance $500,000

Monthly Payment $3,160

Total Interest $637,568

Loan Term 30 years

With Offset Account

Effective Balance $450,000

Monthly Payment $3,160

Total Interest $520,234

Actual Loan Term 26 years

Interest Comparison

Without Offset $637,568

With Offset $520,234

SAVED

Savings Breakdown

Initial Offset Balance $50,000

Monthly Deposits $1,000

Interest Without Offset $637,568

Interest With Offset $520,234

                    Total Interest Saved
                    $117,334
                

Time Saved 4 years 2 months

Year-by-Year Comparison

Year	Interest (No Offset)	Interest (With Offset)	Annual Savings	Cumulative Savings

How Offset Interest Works

Interest = (Loan Balance - Offset Balance) × Interest Rate

Understanding Offset Accounts

What is an Offset Account?

An offset account is a transaction account linked to your home loan. The balance in your offset account is deducted from your loan balance before interest is calculated. For example, if you have a $500,000 loan and $50,000 in offset, you only pay interest on $450,000.

Benefits of Offset Accounts

Reduce interest: Pay less interest on your mortgage
Pay off faster: More of your payment goes to principal
Flexibility: Access your money when needed
Tax efficient: Better than earning interest on savings

100% vs Partial Offset

100% Offset: Full balance reduces your loan
Partial Offset: Only a percentage counts (e.g., 40%)
Most variable rate loans offer 100% offset
Fixed rate loans may have partial or no offset

Maximizing Your Offset

Direct your salary into the offset account
Keep emergency funds in offset instead of savings
Use a credit card for expenses, pay from offset
Consider offset fees vs potential savings