Mortgage Offset Calculator

How a Mortgage Offset Account Saves You Interest

Enter your loan details and your offset account balance above and this tool instantly works out how much interest you'll save over the life of your loan, how much sooner you'll pay it off, and shows a side-by-side chart of your loan balance with and without the offset applied.

The Formula Behind the Calculation

A 100% offset account reduces the balance your lender charges interest on: each period, interest is calculated on (loan balance − offset balance) instead of the full loan balance. If your repayment stays the same as it would without the offset, every dollar of interest saved flows straight into paying down extra principal — which compounds, so a larger offset balance saves progressively more the longer it's maintained.

Worked Example

A $500,000 loan at 6% p.a. over 30 years with a $50,000 offset balance saves about $194,600 in interest and pays the loan off roughly 5 years and 4 months sooner than the same loan with no offset at all — without changing the monthly repayment.

Frequently Asked Questions

How does a mortgage offset account calculator work?

It links a savings account balance to your home loan so interest is only charged on the difference — loan balance minus offset balance — rather than on the full loan. Enter your loan amount, rate, term and offset balance above to see the interest and time that saves you.

How do I calculate mortgage repayments with an offset account?

Your repayment amount itself doesn't change — it's fixed by your loan amount, rate and term, the same as a standard repayment calculator. What changes is how much of each repayment goes to interest versus principal: with less interest charged, more of the same repayment pays down your balance, which is what pays the loan off faster.

Does an offset account reduce my monthly payments?

Not usually — most lenders keep your scheduled repayment the same and let the interest savings shorten your loan term instead. That's why this calculator reports interest and time saved rather than a lower repayment amount; if you want your repayment itself reduced, ask your lender about recalculating it against the lower balance.

Is an offset account better than making extra repayments?

Both reduce the interest you pay, but an offset account keeps your savings accessible — you can withdraw the money anytime, unlike extra repayments made directly onto most loans. If you want to model extra repayments directly, try our Extra Mortgage Repayment Calculator alongside this one.

What's a good offset account balance to aim for?

There's no fixed target — every dollar sitting in a linked offset account saves you interest at your full mortgage rate for as long as it's there. Try a few different offset balances in the calculator above to see how the interest saved scales with your own savings.

Does the offset balance need to stay the same for these results to hold?

Yes — this calculator assumes a constant offset balance for simplicity. In practice your balance will fluctuate as you spend and save, so treat the interest and time saved shown here as an estimate based on maintaining roughly the balance you entered.