Mortgage Offset Calculator
See how much an Australian mortgage offset account could save you in interest, how much sooner you could repay your home loan, and whether offset fees may be worth paying.
Your mortgage
Enter your current loan and offset details. You can leave optional fields blank.
If you owe $500,000 and keep $40,000 in a 100% offset, the calculator models interest on roughly $460,000 while that offset balance remains available.
See what your offset could save
Add your mortgage details to compare your loan with and without an offset account.
Your offset estimate
Based on the details you entered.
Estimates only. Australian lenders may calculate mortgage interest daily and charge it monthly. Actual results can differ because of lender calculation methods, repayment dates, changing offset balances, fees, rate changes and loan terms.
How does a mortgage offset account work?
A mortgage offset account is a transaction account linked to your home loan. Instead of earning interest on the money in the account, its balance reduces the portion of your mortgage used to calculate interest.
Your actual mortgage balance is still $500,000. The $40,000 has not been paid off the loan — it remains in the linked account — but while it is there, a 100% offset generally reduces the balance used to calculate mortgage interest.
Most Australian home loans calculate interest daily. That means the balance sitting in your offset from day to day matters, not simply the balance you happen to have at the end of the month.
What difference can an offset make?
Consider a homeowner with a $500,000 mortgage and $40,000 sitting consistently in a 100% offset account.
A $40,000 offset
The immediate benefit is easier to understand by looking at the balance attracting interest.
The lifetime saving is not simply $40,000 multiplied by the interest rate for every remaining year. Your mortgage balance falls as you repay it, your offset balance may change, and the lower interest charge means more of each regular repayment can reduce principal. That is why the calculator models the loan over time.
Is an offset account worth it?
The answer depends on more than the amount of interest an offset can save. Some offset-enabled mortgages have package fees, account fees or a higher interest rate than a simpler loan without the feature.
Your offset balance
A larger balance generally creates a larger interest benefit, provided it does not exceed the remaining mortgage balance.
The interest rate
The mortgage rate affects the value of reducing your interest-bearing balance. Compare the offset loan with realistic alternatives, not just its headline features.
Fees and loan costs
Annual package fees or a higher offset-loan rate can reduce or outweigh the interest benefit when the offset balance is small.
Use Compare alternatives in the calculator above to enter an annual offset fee and, if relevant, the rate available on a comparable loan without an offset. This gives you a more useful comparison than looking at gross interest savings alone.
Offset account vs redraw: what is the difference?
Both can reduce mortgage interest, but the money is held differently. The exact access rules and fees depend on the lender and loan.
How borrowed or redrawn money is later used can matter for Australian tax treatment. If a property may become an investment or you are considering debt recycling, get appropriate tax advice rather than treating offset and redraw as interchangeable.
Monthly, fortnightly or weekly repayments
CalcNest lets you select your regular repayment frequency so the simulation can model repayments at 12, 26 or 52 intervals per year.
The standard monthly repayment schedule used as the starting point for the calculator.
The same approximate annual scheduled repayment amount is spread across 26 repayments.
The same approximate annual scheduled repayment amount is spread across 52 repayments.
Some borrowers deliberately pay half of their normal monthly repayment every fortnight. Because there are 26 fortnights in a year, that strategy produces the equivalent of 13 monthly repayments rather than 12. CalcNest does not silently assume that extra repayment — the frequency control compares scheduled frequencies on approximately the same annual repayment commitment.
What affects how much interest you save?
A higher offset balance generally reduces the balance attracting mortgage interest by more.
Because lenders commonly calculate home-loan interest daily, maintaining the balance for longer can increase the benefit.
Changes in your home-loan rate change the value of offsetting part of the interest-bearing balance.
Compare package fees, account fees and any difference between your offset-loan rate and realistic no-offset alternatives.
It is also worth checking that your offset account is actually linked correctly to your mortgage, particularly after refinancing or changing loan products.
How CalcNest estimates your offset savings
This calculator is designed for scenario planning rather than reproducing one particular lender's statement.
Mortgage offset calculator FAQs
A 100% offset account generally means the full eligible balance of the linked account is offset against the mortgage balance when calculating interest. For example, a $500,000 mortgage with $40,000 in a 100% offset would initially have roughly $460,000 attracting interest while those balances remain unchanged.
Not directly. Money in an offset remains in a separate linked account. It reduces the mortgage balance used to calculate interest, while your regular repayments continue reducing the actual loan principal.
There is no single balance that suits everyone. The financial benefit depends on your mortgage balance and rate, how long the money remains in the account, and any additional costs attached to the offset loan. Use the scenario buttons above to compare different balances.
It can. If your repayment stays the same while the offset reduces the interest charged, more of the repayment can go towards reducing principal. Over time this can reduce both total interest and the repayment period.
No. A low offset balance may produce only a small interest saving, while an offset-enabled loan could have annual fees, account fees or a higher interest rate. Compare the expected benefit with the total cost of the loan feature.
They work differently rather than one being universally better. An offset is a separate linked account, while redraw generally gives access to eligible extra repayments already made into the loan. Fees, access rules, loan structure and your circumstances can affect which feature is suitable.
CalcNest provides a planning estimate. Australian lenders commonly calculate interest using daily loan and offset balances, while repayment dates, rate changes, fees and lender-specific rules can also affect the result. Your lender's actual loan records remain authoritative.
The calculator does not allow the interest-bearing mortgage balance to fall below zero. Once the mortgage is fully offset, additional cash does not create further mortgage-interest savings in this model.
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