Free offset account calculator. See how your offset balance reduces the interest charged on your home loan. Compare total interest with and without an offset account, calculate your effective interest rate, and see how many years you could shave off your mortgage.
Interest Saved / Year
$0
Tax-free equivalent savings
Time Saved on Loan
0 months
Faster mortgage payoff
Effective Rate
0.00%
Total Interest Saved
$0
Over the life of the loan
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An offset account is one of the most powerful tools for reducing your mortgage costs. It works by reducing the loan balance that interest is calculated on. Every dollar sitting in your offset account is effectively "earning" you the same rate as your mortgage — tax-free.
The real power of an offset account comes from compounding. When you reduce the interest charged each month, more of your regular repayment goes toward principal. This means next month, even less interest is charged, and even more goes to principal. Over 30 years, this snowball effect can save you hundreds of thousands of dollars and years off your loan.
Both offset balances and extra repayments reduce interest. The key advantage of offset is flexibility — your money stays liquid and accessible. Extra repayments may be subject to redraw restrictions or fees. For investment properties, offset is generally preferred as it preserves the tax-deductibility of the full loan amount while still reducing interest costs.
An offset account is a transaction account linked to your home loan. The balance in the offset reduces the loan amount that interest is calculated on. For example, if you have a $500,000 loan and $50,000 in your offset, you only pay interest on $450,000. Your money remains accessible — it's not locked into the loan.
A 100% offset account means every dollar in the account directly reduces your interest. At a 6% interest rate, $50,000 in an offset saves you $3,000/year in interest — tax-free. This is equivalent to earning 6% on a savings account before tax (or around 8-9% gross for higher earners). It's almost always worth the slightly higher loan rate.
An offset account is a separate transaction account — your money stays liquid and accessible. Redraw means making extra repayments on the loan itself, which you can later withdraw. The key difference: offset funds are always yours; redraw funds are technically the lender's until you request them. Some lenders restrict redraw access.
Some lenders allow multiple offset accounts linked to one loan, which can help with budgeting (e.g., separate accounts for bills, savings, everyday spending). However, not all lenders offer this feature, and some charge extra for additional offset accounts. Check your loan terms.
Interest saved through an offset account is not considered taxable income — you're reducing interest charged, not earning interest. This makes offset accounts more tax-effective than savings accounts, especially for higher-income earners. For investment loans, keeping funds in offset rather than paying down the loan preserves your tax deduction.
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