Calculators
Offset account calculator
Money sitting in an offset account reduces the loan balance your interest is calculated on. Enter your own figures below to estimate how much interest, and how much time, an offset could save you.
Estimated interest saved
$0
over the life of the loan, compared with the same loan and no offset
Estimated time saved
0 months
Estimated repayment
$0
principal and interest, monthly
Interest with offset
$0
This calculator gives estimates for general information only. It is not credit advice or an offer of credit, and it does not take into account your objectives, financial situation or needs. Results depend on the figures you enter and the assumptions shown below, which you can edit. Actual amounts will vary with lender fees, charges and credit criteria. Consider your circumstances and seek advice before acting. Talk to us and we'll search for options available to you across 60+ lenders.
The default values are examples only and are not a quote, an offer of credit or a suggestion about any particular loan or lender. Results are not intended to be relied on when making a decision about a financial or credit product. Consider obtaining advice from a licensed professional before making financial decisions.
Assumptions (you can change these)
Every figure this calculator relies on is editable in the form above: loan amount, interest rate, loan term, repayment frequency, offset starting balance and the regular monthly deposit. The conventions below describe how the maths works.
Repayments follow the standard Australian lender display convention: the monthly amount is calculated from the monthly rate (annual rate divided by 12) over the term in months, then weekly = monthly x 12 / 52 and fortnightly = monthly x 12 / 26. Because 26 fortnightly or 52 weekly payments run slightly ahead of 12 monthly payments, paying at the convention amount clears the loan a little before the nominal term even without an offset.
Interest accrues once per repayment period (annual rate divided by periods per year) on the loan balance minus the offset balance, never below zero. There is no daily accrual, and the interest rate is assumed to stay the same for the whole term. Real rates change over time, so long-range results are indicative only.
Your regular offset deposit is entered per month and converted pro rata to the repayment frequency (deposit x 12 / periods per year). Deposits are credited at the end of each period. Money in the offset never makes your repayments for you; it only reduces the interest charged. If the offset balance grows to meet the loan balance, interest falls to zero and the loan still pays down from your regular repayment.
Savings compare against a baseline of the identical loan with no offset balance and no deposits. All amounts are rounded to the cent each period, and the final period is adjusted so the balance lands exactly on zero.
Fees, charges, redraw rules and any pricing differences between loans with and without an offset facility are not modelled.
Plain English
How an offset account works
An offset account is an everyday bank account linked to your home loan. When your lender works out the interest you owe, the money sitting in the offset is counted against your loan balance. If you owe $500,000 and have $20,000 in your offset, you're only charged interest on $480,000.
Your repayment usually stays the same, so as the interest portion shrinks, more of every repayment goes to paying down the principal. That's where the interest savings and the time savings in the calculator come from.
Why people like offsets
- Your money stays yours. It sits in a normal account you can spend from at any time, handy for an emergency fund or savings you don't want locked away.
- Every dollar works twice. Salary credits, savings and even short-stay money all reduce the interest charged while they're in the account.
- It compounds quietly. The longer you keep a balance offsetting the loan, the more of each repayment chips away at the principal.
Offset, extra repayments or redraw?
They can achieve similar interest savings but behave differently. Extra repayments reduce the loan balance directly, and getting the money back usually means using a redraw facility, which is subject to the lender's rules. An offset keeps the money at call in your own account. Which suits you depends on how you like to manage your cash, your discipline with a big accessible balance, and the loans available to you.
Things to weigh up
- Loans with an offset facility can carry account or package fees, or different pricing than a basic loan. The benefit needs to outweigh the cost for your balance.
- The estimate assumes you keep the balance in the account. Spending it reduces the benefit.
- Not every loan offers a full offset, and fixed-rate loans often offer partial offset or none at all.
Not sure whether an offset suits your situation? That's exactly the kind of thing we help with. We'll compare loans with and without offset facilities across 60+ lenders and talk it through in plain English.
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