Offset Account Calculator — How Much Does an Offset Save?
Calculate how much interest your mortgage offset account saves. See the impact of different offset balances on your total loan cost and payoff time.
A mortgage offset account is a transaction account linked to your home loan. The balance in your offset account is subtracted from your loan balance when calculating interest. For example with a $500000 loan and $50000 in your offset you only pay interest on $450000. This can save tens of thousands in interest and years off your loan. The offset account is one of the most powerful mortgage features unique to Australian banking.
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Key Information
| Parameter | Details |
|---|---|
| How It Works | Offset balance reduces interest-bearing loan balance |
| Typical Savings (50K offset) | Save $60000-$100000 over 30 years |
| Tax Advantage | Interest saved is not taxable income |
| Best For | People who maintain cash savings |
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Use Calculator NowFrequently Asked Questions
How much does a $50000 offset save?
On a $500000 loan at 6% for 30 years: without offset you pay $579000 total interest. With $50000 permanent offset you pay $503000 interest saving $76000 and paying off the loan 3 years early. The savings increase dramatically with larger offsets. A $100000 offset saves $140000 and cuts the loan by 5.5 years.
Is an offset better than making extra repayments?
Offset is better for flexibility because you can withdraw money anytime without affecting your loan. Extra repayments are locked into the loan (though redraw may be available). Both achieve the same interest saving. If you might need access to the money use offset. If you want to force savings and reduce temptation make extra repayments. Tax-wise both are identical.
Should I save in offset or invest elsewhere?
If your mortgage rate is 6% money in offset gives you a guaranteed after-tax return of 6%. To beat this with investments you need pre-tax returns of approximately 8.5% (assuming 30% tax rate). While shares historically return 8-10% this is not guaranteed. Risk-averse strategy: fill your offset first then invest above that. Aggressive strategy: invest surplus since long-term share returns typically beat mortgage rates.
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Last updated: March 2026