Home loan offset calculator
What can an offset save you?
Enter your loan, rate, term, and the average balance you keep in an offset account. See the interest saved and years off the loan. It updates as you type.
Assumes offset balance held constant for the loan term, base scheduled repayment, principal and interest, no extra repayments. Real offset savings vary with your actual daily offset balance and any lender-specific offset rules. Indicative only.
Why this matters
What the calculator is actually telling you.
Every dollar you park in an offset account effectively earns the home loan interest rate, tax-free. A $40,000 offset against a $500,000 loan at 6.20% saves around $2,480 per year in interest, which compounds because the smaller interest bill means more of your payment attacks the principal.
Over a 30 year loan the compound effect on a static $40,000 offset can save $80,000 to $100,000 in interest and shorten the loan by 3 to 4 years. Grow the offset (savings, salary parked there, tax refund) and the compound effect grows with it.
Questions
Frequently asked.
How does a home loan offset account actually save interest?
Interest on a home loan is calculated daily on the outstanding balance. An offset account is a linked transaction or savings account whose balance is subtracted from the loan balance for interest calculation purposes. If you owe $500,000 and hold $40,000 in the offset, the lender charges interest on $460,000 that day. You still owe the full $500,000 in principal, but the daily interest bill is smaller.
Is offset better than making extra repayments?
For most Perth borrowers on variable rates the interest impact is roughly the same. Offset keeps the money accessible (spend, redraw, tax planning) while extra repayments lock it into the loan. On a fixed rate, offset behaviour can be limited or unavailable, and extra repayments may be capped. A broker can compare both on your specific loan and lender.
Do I have to pay for an offset account?
Most offset home loans in Australia come as a package with a small annual fee (usually $250 to $400). The fee is often paid back many times over in interest savings if you carry more than a few thousand in the offset consistently. Some non-package offset products exist at slightly higher rates.
What is the difference between offset and redraw?
Redraw pulls back money you already paid onto the loan. Offset never pays the money onto the loan, it just gets counted against interest calculation each day. Practical difference: offset money stays clearly yours in a separate account (good for cashflow and tax if the loan later becomes investment), redraw sits inside the loan and can be reversed by the lender in some scenarios.
Where do I go to see if offset makes sense on my loan?
Call 0489 082 257. A Central Lending Solutions broker will model an offset against your current loan and lender, and check whether switching to an offset-friendly product beats staying put.
Want this applied to your real situation?
Talk to Harj.
No fee for most clients. A real conversation about your numbers and your options across 30+ lenders. Most clients hear back the same day.