Offset Account Calculator
See how much interest an offset account could save you each year — and across the whole life of your loan — while keeping your cash accessible.
🇦🇺 AustraliaHow this offset account calculator works
An offset account is a everyday account linked to your home loan. Its balance is subtracted from your loan balance before interest is calculated, so you're charged interest only on the difference. Park $40,000 in an offset against a $600,000 loan and you pay interest as though you owed $560,000 — yet the money stays fully accessible for spending or emergencies.
This calculator shows two views. The headline figure is your first-year interest saving — your offset balance multiplied by your interest rate, the rough interest you avoid in the next 12 months. The breakdown also shows the total interest saved over the term, found by simulating the loan month by month: one amortisation with no offset, and one where each month's interest is charged on the loan balance minus your offset balance.
Because less interest is charged each month while your repayment stays the same, more of every payment chips away at the principal. That can clear the loan earlier — shown here as time saved. The effective interest-charged balance is simply your loan amount minus the offset, the amount you're actually paying interest on right now.
These results are an approximation. They assume your offset balance stays constant for the whole term and that your repayment never changes — in reality the balance rises and falls as you transact, so your true savings will differ. Use this to gauge the potential, then confirm the detail with your lender or broker.
Offset account questions
An offset account is a transaction or savings account linked to your home loan. The balance in it is "offset" against your loan balance, so interest is charged only on the difference. Keeping $20,000 in an offset against a $500,000 loan means you pay interest as if you owed $480,000 — while the cash stays fully accessible.
It approximates two things. First, a first-year interest saving — your offset balance multiplied by your interest rate, the rough interest you avoid this year. Second, a full-term saving from simulating the loan month by month with and without the offset applied, assuming the offset balance stays constant and your repayment stays the same.
It can. Because less interest is charged each month, more of your fixed repayment goes to principal, so the loan can clear earlier — the "time saved" figure here. The effect grows with a larger, longer-held offset balance. In practice your balance fluctuates, so real results differ from this constant-balance estimate.
It depends on your goals. An offset keeps your money liquid while still cutting interest, which suits people who want an emergency buffer. Extra repayments or redraw can achieve similar interest savings but are less flexible to access. This tool only models the offset scenario — compare options with your lender or broker.
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