Offset Account Calculator
See how much interest an offset account balance saves on your home loan, assuming you keep making the same repayment.
- Time saved
- 5 years 7 months
- New payoff time
- 24 years 5 months
This calculator provides estimates only. It is general information, not financial or taxation advice, and doesn't account for your full personal circumstances. Confirm figures with your lender or a licensed adviser before making a decision.
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How this calculator works
An offset account is an everyday transaction account linked to your home loan. The bank doesn't pay you interest on the balance — instead, it reduces the loan balance that interest is calculated on. Keep $50,000 sitting in an offset against a $500,000 loan, and you're only charged interest as if you owed $450,000, while still being able to spend that $50,000 whenever you need to.
Enter your loan and your average offset balance to see the effect. This calculator assumes you keep making your original repayment amount rather than reducing it — so the saving shows up as a shorter loan term and less total interest, exactly like an extra repayment, except the money in the offset stays yours to withdraw.
Worked example: on a $500,000 loan at 6.2% p.a. over 30 years, keeping a steady $50,000 in an offset account saves around $206,300 in interest and pays the loan off about 5.6 years early — a bigger effect than the same amount as a one-off extra repayment, because the offset balance keeps reducing interest every single period rather than just once.
The saving scales with your average balance, not your peak balance — a balance that fluctuates through the month (as salary comes in and bills go out) offsets less, on average, than a balance that sits steady.
Frequently asked questions
- Why does offset save more than the same amount as a lump-sum extra repayment?
- A lump-sum extra repayment reduces your balance once. An offset balance that stays in the account keeps reducing the interest calculation every single period for as long as it's there — so a steady $50,000 offset saves more over time than a one-off $50,000 extra repayment, assuming you don't spend the offset money.
- Does my offset balance need to stay constant?
- No, and in reality it won't — most offset balances fluctuate as pay comes in and expenses go out. This calculator uses a single steady balance as a simplified estimate; your real saving will track your actual average balance over time.
- Is an offset account the same as making extra repayments?
- They have a similar interest-saving effect, but offset money remains accessible (you can withdraw it any time), while extra repayments permanently reduce your loan balance and are harder to get back out without refinancing or a redraw facility.