Australian Mortgage Offset Calculator
On a A$500,000 loan at 6% over 30 years, keeping A$50,000 in a 100% offset account saves A$194,606.16 in interest and pays the loan off 5.3 years sooner — with the same A$2,997.75 monthly payment. That's equivalent to cutting the loan's real rate to about 4.24%. Enter your own loan and offset balance below.
$194,606.16 interest saved over the life of the loan
Time saved: 5.3 years (64 months) · Monthly payment (unchanged): $2,997.75
Effective rate equivalent: about 4.24% instead of the 6% nominal rate — the flat rate that would cost the same total interest without an offset account.
With offset vs. without offset
| Without offset | With offset | |
|---|---|---|
| Total interest paid | $579,190.95 | $384,584.78 |
| Time to pay off | 30.0 years | 24.7 years |
Sensitivity: how much offset is worth (same loan, rate & term)
| Offset balance | Interest saved | Time saved |
|---|---|---|
| $10,000 | $47,531.50 | 1.3 years |
| $25,000 | $109,661.98 | 3.0 years |
| $50,000 | $194,606.16 | 5.3 years |
| $100,000 | $317,968.35 | 8.8 years |
Fixed offset balances, same $500,000 loan at 6% over 30 years — for comparison only.
Yearly balance schedule (with your offset)
| Year | Interest paid | Principal paid | Loan balance | Offset balance |
|---|---|---|---|---|
| 1 | $26,749.08 | $9,223.95 | $490,776.05 | $50,000.00 |
| 2 | $26,180.17 | $9,792.86 | $480,983.19 | $50,000.00 |
| 3 | $25,576.17 | $10,396.86 | $470,586.32 | $50,000.00 |
| 4 | $24,934.91 | $11,038.12 | $459,548.20 | $50,000.00 |
| 5 | $24,254.10 | $11,718.93 | $447,829.28 | $50,000.00 |
| 6 | $23,531.31 | $12,441.73 | $435,387.55 | $50,000.00 |
| 7 | $22,763.93 | $13,209.10 | $422,178.45 | $50,000.00 |
| 8 | $21,949.22 | $14,023.81 | $408,154.64 | $50,000.00 |
| 9 | $21,084.26 | $14,888.77 | $393,265.87 | $50,000.00 |
| 10 | $20,165.95 | $15,807.08 | $377,458.79 | $50,000.00 |
| 11 | $19,191.01 | $16,782.02 | $360,676.77 | $50,000.00 |
| 12 | $18,155.93 | $17,817.10 | $342,859.66 | $50,000.00 |
| 13 | $17,057.01 | $18,916.02 | $323,943.64 | $50,000.00 |
| 14 | $15,890.31 | $20,082.72 | $303,860.92 | $50,000.00 |
| 15 | $14,651.65 | $21,321.38 | $282,539.54 | $50,000.00 |
| 16 | $13,336.60 | $22,636.43 | $259,903.11 | $50,000.00 |
| 17 | $11,940.43 | $24,032.60 | $235,870.51 | $50,000.00 |
| 18 | $10,458.15 | $25,514.88 | $210,355.63 | $50,000.00 |
| 19 | $8,884.45 | $27,088.58 | $183,267.05 | $50,000.00 |
| 20 | $7,213.69 | $28,759.34 | $154,507.71 | $50,000.00 |
| 21 | $5,439.87 | $30,533.16 | $123,974.55 | $50,000.00 |
| 22 | $3,556.66 | $32,416.38 | $91,558.17 | $50,000.00 |
| 23 | $1,557.28 | $34,415.75 | $57,142.43 | $50,000.00 |
| 24 | $62.63 | $35,910.40 | $21,232.03 | $50,000.00 |
| 25 | $0.00 | $21,232.03 | $0.00 | $50,000.00 |
Standard AU home-loan offset mechanic: interest each month is charged on (loan balance − offset balance), with the monthly payment unchanged — the saving comes entirely from a bigger share of each payment going to principal. Assumes a constant interest rate and an offset balance that stays flat or grows linearly with a fixed monthly top-up; doesn't model rate changes, loan recasts, or account-keeping fees. How we calculate →
How an offset account actually reduces your interest
A 100% offset account is linked to your home loan, and each month the bank calculates interest on (loan balance − offset balance), not on the full loan balance. Your monthly repayment stays the same — A$2,997.75 on a A$500,000 loan at 6% over 30 years, with or without an offset — so every dollar of interest you don't pay because of the offset flows straight into paying down principal faster instead.
That's the whole mechanic: no interest is "earned" on the offset balance itself (unlike a savings account) — it simply reduces the balance interest is charged on, which is more valuable than earning interest because it's not taxed as income.
What a 50,000 offset is actually worth on a 500,000 loan
Take a A$500,000 loan at 6% p.a. over 30 years: without any offset, you'd pay A$579,190.95 in total interest over the life of the loan. Keep A$50,000 sitting in a linked offset account the whole time and total interest drops to A$384,584.78 — a saving of A$194,606.16 — and the loan is paid off 5.3 years earlier, even though the monthly payment never changes.
Double the offset to A$100,000 and the saving nearly doubles too: A$317,968.35 saved and 8.8 years off the loan term — offset value scales roughly with the balance, for a given loan and rate.
The sensitivity table: how much is your offset actually worth?
The table below runs the same A$500,000/6%/30-year loan at four common offset balances — A$10,000, A$25,000, A$50,000 and A$100,000 — so you can see the interest saved and years shaved off at each level without re-entering numbers four times: A$10,000 saves A$47,531.50 (1.3 years); A$25,000 saves A$109,661.98 (3.0 years); A$50,000 saves A$194,606.16 (5.3 years); A$100,000 saves A$317,968.35 (8.8 years).
Fixed vs. growing offset balance
Most people's offset balance isn't perfectly flat — it grows as salary is deposited and shrinks as bills are paid. The calculator models two simplified scenarios: a roughly constant balance (useful if you keep a stable buffer), or a balance that grows linearly with a fixed monthly top-up (useful if you're actively building savings into the offset). Either way, the loan's monthly payment and interest rate are assumed to stay constant over the comparison — a real loan can also see rate changes, extra lump-sum payments, or a loan recast, none of which this tool models.
Offset vs. redraw vs. paying down the loan directly
An offset account and a redraw facility often achieve a similar interest outcome, but they behave very differently day to day: money in an offset account remains instantly accessible as your own transaction/savings balance, while extra repayments through redraw reduce the loan balance directly and may require a request (sometimes with a fee or minimum amount) to access again. For anyone who wants flexible access to their savings while still reducing interest, an offset account is usually the more flexible structure — but check your specific loan's terms, since not every product includes a 100% offset facility.
Frequently asked questions
How much interest does a 50,000 offset save on a 500,000 mortgage?
On a A$500,000 loan at 6% over 30 years, a constant A$50,000 offset balance saves about A$194,606.16 in interest and pays the loan off 5.3 years sooner, with no change to the monthly repayment.
Does an offset account change my monthly mortgage payment?
No — the payment stays fixed (A$2,997.75 in this example); the saving shows up as more of each payment going to principal instead of interest, so the loan is paid off earlier rather than the payment getting smaller.
What's the effective interest rate with a mortgage offset?
It depends on the offset balance relative to the loan — on a A$500,000 loan at 6% with a A$50,000 offset, the effective rate (the flat rate that would cost the same total interest without an offset) works out to about 4.24%.
Is a bigger offset balance always proportionally better?
Offset value scales with the balance for a given loan and term — doubling the offset from A$50,000 to A$100,000 roughly doubles the interest saved (A$194,606.16 vs A$317,968.35 in this example) — but the exact ratio depends on the loan amount, rate and remaining term.
What if my offset balance equals my entire loan?
If the offset balance matches or exceeds the loan balance every month, no interest is charged at all for as long as that holds — every repayment goes straight to principal, and the loan is paid off purely on the payment schedule with zero total interest.
Does the calculator model a growing offset balance?
Yes — switch to "grows with a monthly top-up" and set a fixed monthly contribution; the tool then models the offset balance increasing linearly each month, which reduces the interest base a little more every period compared with a flat balance.
What doesn't this calculator model?
It assumes a constant interest rate and repayment amount for the whole comparison — it doesn't model rate rises or cuts, lump-sum extra repayments, loan recasts, or account-keeping fees some offset products charge. Treat the result as an estimate to compare offset scenarios, not a bank's official amortisation schedule.
Researched & verified by the Calcuris Data & Research Team. How we build and check our tools →