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Home Loan Offset Calculator

What does a home loan offset calculator show?

This calculator compares the same principal-and-interest loan with and without a constant offset balance. It estimates how much interest could be avoided and how much earlier the loan could be repaid if the scheduled repayment stays unchanged.

Use it to explore the effect of retaining cash in an eligible offset account. The result is a model, not a product recommendation. It does not compare the rate or fees of different loans.

How to use the calculator

Enter the loan amount or current outstanding balance, an annual interest rate and the remaining term in whole years. Select monthly, fortnightly or weekly repayments. Then enter the offset balance you expect to maintain.

Calculate refreshes the result; valid changes also update automatically. Reset restores $400,000, 6%, 30 years, monthly repayments and a $20,000 offset balance. The rate is illustrative, not a live loan offer.

How an offset account works

A mortgage offset account is a separate account linked to an eligible home loan. A 100% offset reduces the balance used to calculate interest. For example, $20,000 in offset against a $400,000 loan leaves $380,000 subject to interest at the start.

The money in offset does not itself repay the loan. In this model, the loan still starts at $400,000, and the full principal is repaid through instalments. The offset cash remains separate throughout. This distinction matters when interpreting the final balance and revised term.

Why the repayment stays the same

The regular instalment is calculated from the loan amount, rate, term and frequency without an offset. The model then uses that same instalment in both schedules. With less interest charged, more of each payment can reduce the principal.

The final instalment is reduced to the amount needed to clear the balance. Time savings are counted in whole payment periods. A lender may handle repayments differently, so confirm the applicable terms before relying on the estimate.

Explore the $20,000 offset example

The default example uses a $400,000 loan at 6% over 30 years. Its monthly principal-and-interest payment is approximately $2,398.20. Maintaining a $20,000 offset balance reduces the interest charged while the model keeps that repayment unchanged.

The results show the interest difference across both complete schedules and the revised payoff period. Increase or decrease the offset balance to explore how the outcome changes. The chart includes the actual payoff point rather than rounding it to an anniversary.

How the model calculates interest and time saved

Each period, interest is the annual rate divided by 12, 26 or 52, multiplied by the greater of zero and the opening loan balance minus the offset balance. The scheduled payment first covers interest, then reduces principal.

The offset is constant and applies from the first period. It is not withdrawn to extinguish the loan when the balance falls below the offset amount. Instead, interest becomes zero and the scheduled repayments continue until the loan principal is cleared. The comparison uses equal periods rather than a daily calendar.

Read the chart and schedule

The solid blue line is the standard loan balance. The dashed navy line is the balance with offset. Both start at the same loan amount. The line for the offset scenario finishes when that loan is fully repaid.

Move the period slider for exact modelled balances. The annual table compares balances and cumulative interest savings at each year-end. Download Schedule exports both schedules into one CSV, including the repayments, interest and principal for each period. After the offset loan is repaid, its later cash-flow entries are zero.

Consider fees and changing balances

This tool shows gross interest savings. It excludes offset account fees, package fees and any interest-rate difference between products. Those costs can reduce the overall benefit. It also assumes the offset balance stays available for the entire repayment period.

If you spend part of the money, its interest-reducing effect falls. If you add funds, that effect can increase. Run several constant-balance scenarios as a planning exercise, but do not assume they reproduce the outcome of a fluctuating account.

What this calculator does not model

The calculation excludes partial offsets, extra repayments, rate changes, interest-only periods, redraw, tax effects, daily interest and account fees. It assumes all instalments are paid on time and that the rate and offset balance remain unchanged.

At 0% interest there is no interest to save. A zero offset produces the same schedule as the standard loan. An offset equal to or above the loan balance prevents interest in this model, but does not generate negative interest or remove the need to repay principal.

Frequently asked questions