How to use the Offset Account Calculator
- 1 Enter the loan amount, rate and term.
- 2 Enter your current offset balance.
- 3 Enter how much you add to the offset each month.
- 4 Read the interest saved and new loan term.
Worked example
A $600,000 loan at 6% over 30 years with $30,000 in the offset and $500 added each month. Repayments stay at about $3,597 a month, but the loan is paid off about 6 years 8 months sooner, saving about $287,970 of interest.
Features
Monthly offset
Interest charged on the loan minus the offset balance.
Regular savings
Adds monthly savings to the offset.
Time saved
Shows how much sooner the loan is paid off.
When to use it
Choosing a loan
Decide whether an offset is worth a higher rate or fee.
Savings strategy
Keep your emergency fund in the offset.
Salary into offset
See the effect of paying your salary into the offset.
Investors
Plan an offset before turning a home into a rental.
Frequently asked questions
How does an offset account work?
It is a transaction account linked to your home loan. Its balance is subtracted from the loan before interest is calculated.
Is offset interest taxed?
No. You save interest instead of earning it, so there is no tax, which beats a savings account.
Offset or redraw?
Both save interest. An offset keeps money separate and easier to reach, and can be better if the home later becomes a rental.
Are offset accounts full or partial?
Most are 100% offset. Some offer partial offsets, such as 40%.
Do offsets cost more?
Loans with offsets often have a higher rate or a package fee. Compare the saving with the cost.
Can I have more than one?
Some lenders allow multiple offset accounts on one loan.
Does it work on fixed loans?
Many lenders only allow full offsets on variable loans.
Does the repayment change?
No. Repayments stay the same, so more goes to principal and the loan ends sooner.
How much should I keep in the offset?
As much as you are comfortable with, including your emergency fund.
What if I take money out?
You can, but interest savings fall.
Is an offset better than paying off the loan?
They save the same interest. An offset keeps savings accessible, which is valuable in emergencies.
Can an offset help when I move out?
If the home becomes a rental, keeping savings in the offset keeps the loan high and interest deductible.
Do offsets earn interest?
No, but each dollar saves interest at your home loan rate, tax-free.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated