Content updated 2 November 2026.
How to use the offset account calculator
- Enter your current home loan balance, annual interest rate and remaining term.
- Enter the offset balance you realistically expect to maintain.
- Leave the optional monthly repayment blank to use the calculated principal-and-interest repayment, or enter your actual monthly amount.
- Compare estimated interest and time saved, then try a lower balance to see how the result changes.
Looking for a mortgage repayment calculator with offset and extra repayments? Use that tool to compare those strategies together. This page isolates the effect of an offset balance using the same monthly payment.
Offset savings: a worked example
Suppose your home loan balance is $600,000 and you maintain $50,000 in a 100% offset account. The interest-bearing balance starts at $550,000. At an illustrative 6% annual rate, this calculator’s monthly approximation gives $3,000 interest without the offset and $2,750 with it in the first month: a $250 difference.
With the same repayment, that first-month difference reduces principal faster. It does not mean your required repayment falls by $250. Over time the balances change, so do not multiply the first-month saving by the remaining number of months to estimate lifetime savings. These figures are an illustration, not a current rate offer or lender quote.
Understand the calculator assumptions
- Monthly approximation: annual interest is divided by 12. Actual loans may calculate interest daily, so payment and transaction timing can produce different results.
- Constant balance and rate: the entered offset balance and interest rate stay unchanged throughout the model. There are no salary deposits, withdrawals or rate changes.
- 100% offset: the balance offsets interest dollar for dollar, with interest-bearing debt floored at zero. Partial-offset products are not modelled.
- Same repayment: both scenarios use the calculated scheduled payment or your entered monthly payment. The offset funds remain separate rather than being spent to clear the loan.
- Comparison horizon: the simulation runs up to the entered remaining term. If a custom repayment does not clear the loan within that period, the results cover that period and are not a full lifetime payoff comparison.
- Costs excluded: fees, product rate differences, tax outcomes and lender-specific restrictions are not included.
Is an offset account worth the cost?
Compare the balance you can maintain with any additional fees and rate difference across the whole loan. Keep the cash accessible for your actual needs and test a lower balance if you expect to spend some of it. Ask the lender whether the offset is full or partial and which loan account it links to.
For access rules and the difference between money in a separate account and extra repayments already made into the loan, read our offset account versus redraw guide. For a broader review, discuss your loan structure with Chris Berry.
Offset calculator questions
How does an offset account reduce mortgage interest?
A linked offset balance reduces the loan balance used to calculate interest under the lender’s rules. This calculator assumes a 100% offset and a constant balance. The money remains in the offset account; it is not used as a lump-sum repayment.
Does an offset account lower my monthly repayment?
Do not assume so. This calculator keeps the same monthly payment in both scenarios, allowing less interest to translate into faster principal reduction. Your lender determines the required repayment and may change it when rates or loan terms change.
Can I compare an offset account and extra repayments together?
Use the mortgage repayment calculator to model an offset balance and regular extra repayments together, including weekly or fortnightly input options. The dedicated offset calculator focuses on comparing a constant offset balance at the same monthly payment.
What if my offset balance changes during the month?
Use a realistic average balance for a broad scenario, then try lower and higher balances. This calculator does not track daily transactions. The timing of deposits and withdrawals and the lender’s calculation rules affect actual savings.
Does the calculator include offset fees or a higher loan rate?
No. The comparison uses the same entered rate and excludes fees. Compare any package or account fees and rate difference separately before deciding whether an offset feature is worthwhile.
Source checked 2 November 2026: Moneysmart: mortgage offset accounts. Calculations are estimates for exploring scenarios, not a repayment quote or credit approval.