Mortgage Offset Calculator
Calculate how much interest and time your offset account balance saves on your home loan.
How a Mortgage Offset Account Works
A mortgage offset account is a savings or transaction account linked to your home loan. Every dollar in the offset account reduces the loan balance on which interest is calculated — but without actually reducing your loan balance (so you can withdraw it anytime).
The Maths
If your loan balance is $500,000 and you have $50,000 in your offset account, you only pay interest on $450,000. At 6.5%, that's an interest saving of $3,250 per year — or $270 per month — compared to having no offset account.
Tax Efficiency
Because offset savings reduce your mortgage interest (not earn interest), there's no tax on the "return." This makes an offset account particularly efficient for higher-income earners in the 37% or 45% tax brackets — the after-tax equivalent return is much higher than a savings account paying the same rate.
Offset vs Redraw
Offset accounts sit outside the loan structure. Redraw facilities let you access extra repayments made directly into the loan. For investment properties, keeping funds in an offset (not reducing the loan) preserves deductibility of future interest — making offset strategically important for property investors.