Offset Account Calculator
See how money sitting in an offset account can reduce the interest you pay and shave years off your loan — while keeping your savings accessible.
Average balance kept in your offset
Interest saved
$173,607
Time saved
3y 11m
Repayment
$3,636/mo
Same repayment — see where each dollar goes
Your monthly repayment of $3,636 stays identical. The offset just moves money from the interest column into principal.
Without offset — interest charged on $600,000
With $40,000 in offset — interest charged on $560,000
$203 extra of this month's same repayment now goes straight to paying down your loan instead of interest — and that gap grows every month as your balance falls.
Figures are first-month estimates for illustration. Actual splits change monthly as your balance reduces.
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Book with these numbersThe bit most people miss: your repayment never changes
This is the part that confuses almost everyone. Putting money in an offset account does not lower your monthly repayment — your repayment stays exactly the same. What changes is how that repayment is split.
Every repayment is made up of two parts: interest (the bank's charge) and principal(the bit that actually reduces what you owe). Because interest is calculated only on your loan balance minus your offset balance, the offset shrinks the interest portion. Your repayment is fixed, so that saved interest doesn't disappear — it gets redirected straight into paying down your principal.
More principal paid each month means a smaller balance next month, which means even less interest the month after — a compounding effect that pays your mortgage off years sooner. The visual below shows exactly how the same dollar repayment gets re-split the moment money sits in your offset.
A simple example
On a $600,000 loan at 6.1%, your first month's interest is about $3,050. Park $40,000 in your offset and you're only charged interest on $560,000 — roughly $2,847. That's about $203 of your same repayment that now attacks the principal instead of the bank's interest. Repeat that every month and it snowballs.
Because it works like a high-interest savings account (tax-free, at your home loan rate), an offset is one of the most effective ways to pay your loan off sooner without locking your money away — you can still access the cash any time.
Key terms explained
The main terms used in this calculator and its results.
- Offset Account
- A transaction account linked to your loan whose balance reduces the amount of interest you're charged.
- Ongoing Fees
- Recurring charges such as monthly account-keeping or annual package fees that apply over the life of a loan.
- Principal
- The original amount of money you borrow, separate from the interest charged on it.
- Redraw Facility
- A feature that lets you withdraw extra repayments you've made above your minimum, if you need the money back.
- Variable Rate
- An interest rate that can move up or down over time in line with the market and lender decisions.
Frequently asked questions
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