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Home Offset Caculator

Why do people consider offset accounts?

In simple terms, keeping money in an offset account could reduce the interest charged on your home loan and shorten the time it takes to repay your mortgage.

Our Home Loan Offset Calculator show you how this works by letting you estimate the potential interest savings and loan-term reduction from maintaining a constant offset balance against your home loan. It gives you a simple way to see how an offset account may affect your loan over time.

What is a home loan offset account?

An offset account is a transaction account linked to an eligible home loan.

The money held in the offset account is used to reduce the portion of your loan balance on which interest is calculated.

For example, a $500,000 home loan with $50,000 held in a 100% offset account may result in interest being calculated on $450,000 rather than the full loan balance.

The actual benefit depends on the loan structure, interest rate, offset balance, fees and how the lender calculates interest.

What does the offset calculator show?

Enter your home loan details and estimated offset balance to calculate:

  • estimated interest savings
  • potential reduction in your loan term
  • the effect of a constant offset balance
  • the difference between having an offset and having no offset
  • how your loan balance may reduce over time

The calculator is designed to show the potential long-term impact of keeping funds in an offset account.

How can an offset account reduce home loan interest?

Home loan interest is generally calculated on the outstanding loan balance.

When an eligible offset account is linked to the loan, the offset balance can reduce the amount used to calculate interest.

This means more of your regular repayment may go towards reducing the loan principal rather than paying interest.

Over time, this may reduce the total amount of interest paid and shorten the loan term.

How much should you keep in an offset account?

The amount held in an offset account can make a significant difference to the estimated savings.

A larger constant balance generally results in a greater reduction in interest than a smaller balance.

You can use the calculator to compare different offset amounts and see how the estimated savings change.

For example, you may want to test the impact of keeping $10,000, $25,000, $50,000 or more in your offset account.

Offset account versus making extra repayments

Both an offset account and extra repayments can reduce the amount of interest paid on a home loan.

The way they operate is different.

Money held in an offset account generally remains accessible through the linked transaction account, while additional repayments are paid directly into the loan.

Access to extra repayments can depend on the loan product, redraw conditions and lender requirements.

The calculator can help you understand the effect of an offset balance, but the right loan structure will depend on your circumstances and how you use your money.

Can an offset account help you repay your home loan sooner?

Maintaining a consistent offset balance may reduce the interest charged on your loan.

Where your regular repayments remain unchanged, this can mean a greater portion of each repayment reduces the loan principal.

Over time, this may shorten the period required to repay the loan.

The actual result will depend on your loan balance, interest rate, repayment amount, offset balance and any future changes to the loan.

Calculate your potential offset savings

Enter your current home loan balance, interest rate, remaining loan term and estimated offset balance to see how an offset account could affect your mortgage.

You can compare different offset balances to understand the potential impact on interest costs and the estimated time required to repay your home loan.

Important Note: The calculators and tools provided are for general information purposes only. They are designed to illustrate possible scenarios and should not be relied upon as financial, legal, or taxation advice. The results are based on the information you enter and certain assumptions, which may not reflect your personal circumstances. You should consider obtaining professional advice before making any financial decisions. While every effort is made to ensure the information is accurate and up to date, no guarantee is given as to its completeness or reliability.

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FABIAN RESTAINO (Credit Representative Number 382599) and Finance Industries Australia Pty Ltd (ABN: 81 619 871 788 with Credit Representative Number 500181) are authorised Credit Representatives under Australian Credit Licence 387025.

The information provided is on the understanding that it is for illustrative and discussion purposes only. Whilst all care and attention is taken in its preparation any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances. Terms, conditions, fees and charges may apply. Normal lending criteria apply. Rates subject to change. Approved applicants only.
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