Offset Account Calculator

See how much interest you can save by keeping your savings in an offset account

Loan & Offset Details

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%
$
Your current savings in the offset account
$
How much you'll add to offset each month
Interest Saved
$0
Time Saved
0 years
With Offset
$0
Without Offset
$0

Interest Savings Over Time

Loan Balance Comparison

How Offset Accounts Work

Understanding the power of offset accounts for Australian mortgages

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What is an Offset Account?

An offset account is a transaction account linked to your home loan. The balance in this account "offsets" your loan balance when calculating interest, reducing the amount of interest you pay.

Example: If you have a $500,000 loan and $50,000 in your offset account, you only pay interest on $450,000.
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Daily Interest Calculation

In Australia, home loan interest is calculated daily based on your outstanding balance. This means every dollar in your offset account immediately reduces your interest from that day forward.

Key Benefit: Unlike making extra repayments, money in your offset account remains accessible while still saving you interest.
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Tax Benefits

Interest saved through an offset account is more valuable than interest earned in a regular savings account because you don't pay tax on the savings.

Example: Saving $3,000 in interest is equivalent to earning ~$4,200 in a savings account (at 30% tax rate).
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Flexibility & Access

Unlike extra repayments which may be locked in or require redraw fees, your offset account funds are always accessible. You can deposit and withdraw freely while still saving interest.

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Maximize Your Savings

To get the most from your offset account:

  • Deposit your salary directly into it
  • Keep your emergency fund there
  • Pay bills from it just before they're due
  • Maintain the highest average daily balance
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Offset vs Extra Repayments

Offset Account: Flexible, accessible, tax-effective
Extra Repayments: Permanent reduction, may have redraw restrictions

Best Strategy: Use offset for emergency funds and short-term savings; use extra repayments for permanent debt reduction.