The Finance Algorithm

Offset Account Calculator

Calculate how much an offset account can save you in interest on your home loan

Updated October 2026Built and checked by MaverickHow it's calculatedReport an error

Your numbers

Updates as you type
$
$500k

Your current loan balance

%
6.8%

Offset works against your actual rate: defaults to market avg

30y
$
$50k

Average balance you'll keep in offset

$
$0

Additional monthly savings: compounds the effect

The button asks our AI to explain these figures in words.

Your offset account impact

Yearly interest saved

$3,400

Total interest saved

$243,972

Over loan term

Time saved

6.2 years

74 months

Equivalent rate

6.8%

tax-free, on offset cash

Daily saving

$9.32

Monthly saving

$283

Loan balance with vs without your offset

Top: standard amortisation. Bottom: same loan with your offset working in parallel.

  • Without offset
  • With offset

Without offset

$0k$124k$247k$371k$495kYr 1Yr 7Yr 13Yr 18Yr 24Yr 30

With your offset

$0k$123k$246k$368k$491kYr 1Yr 7Yr 13Yr 18Yr 24Yr 30

What different offset balances would save

Total interest saved over the life of the loan, at the same rate and monthly deposit.

$20k$116k$50k$244k$100k$388k$200k$548k

How it works

An offset account is like a savings account linked to your home loan. The balance offsets your loan, meaning you only pay interest on the difference. If you have a $500,000 loan and $50,000 in offset, you only pay interest on $450,000. This can save you thousands over your loan term.

  1. 1Enter your current loan balance
  2. 2Input your interest rate
  3. 3Enter your loan term
  4. 4Add your expected offset account balance
  5. 5Optionally add a monthly deposit amount
  6. 6See your interest savings

The figures today

As of 7 November 2026, the lowest variable home loan rate is 5.93%, from SCCU's BROKER HOME LOAN, while the typical best across 104 institutions is 6.38%. The lowest 3-year fixed home loan rate is 6.24%, from Credit Union SA's 3-Year Fixed 40 Year Home Loan Package, while the typical best across 80 institutions is 6.69%. The RBA cash rate is 4.85%. Those are for an owner-occupier paying principal and interest at an 80% LVR.

Home loan rates todayWho passed on the last RBA move

Worked examples

Salary Worker with Savings Buffer

Nina has a $550,000 loan at 6.3%, and keeps a consistent $40,000 emergency fund in her offset.

Loan amount
$550,000
Interest rate
6.3%
Loan term (years)
30
Offset account balance
$40,000
Monthly deposit to offset
$0

Interest saved: $181,700 over the loan life. Loan paid off 4.4 years earlier. The $40,000 effectively earns 6.3% tax-free.

Building Offset Over Time

Tom starts with $10,000 in offset but adds $1,500 per month to his $480,000 loan at 6.5%.

Loan amount
$480,000
Interest rate
6.5%
Loan term (years)
28
Offset account balance
$10,000
Monthly deposit to offset
$1,500

After 5 years, offset balance reaches $100,000. Total interest saved: $347,000. Loan paid off 9.3 years early.

Questions people ask

Is an offset account worth the extra cost?
Divide the yearly fee for the offset by your loan rate to find the balance that covers it: at 6%, a $300 fee is covered by an average balance of $5,000. Above that the offset comes out ahead - $50,000 at 6% saves about $3,000 of interest a year.
What's the difference between offset and redraw?
An offset account is a separate bank account - your money stays accessible. Redraw means making extra payments into the loan that you can withdraw later, but the lender controls access and may limit redraw amounts.
Does offset work with fixed rate loans?
Generally no - offset only works with variable rate loans. Some lenders offer partial offset on fixed loans, but it's rare. This is why split loans are popular - you can offset against the variable portion.

The terms, in plain English

Offset Account
A transaction account linked to your mortgage. The balance reduces the loan amount interest is calculated on.
100% Offset
The full balance in your offset account is deducted from your loan when calculating interest. More common than partial offset.
Partial Offset
Only a percentage (e.g., 40%) of your offset balance reduces the interest calculation. Less beneficial than 100% offset.
Tax-Free Return
Offset savings aren't taxable income - equivalent to earning your interest rate tax-free, which beats most savings accounts.

Official sources

Compare with Extra Repayments

See if making extra repayments might work better for your situation.

Calculate Your Repayments

Understand your baseline repayments before adding offset benefits.

Explore Split Loans

Consider splitting to get both fixed security and variable offset benefits.