Home Loan Offset Calculator

A home loan offset calculator that shows what the money in your offset account is worth. Enter your loan balance, your rate and your offset balance, and it works out the interest you avoid and how much sooner you could be debt free. Below the tool is the part most calculators skip: how to check that your lender is actually applying the offset, which ASIC found some banks were not.

Want a more accurate result?

Calculator results are estimates only. What an offset saves depends on how your lender applies it, how long the money stays in the account and whether the account is linked correctly. A broker can check it against your actual loan.
No fee from us for arranging your finance. No obligation. Takes 2 minutes

What this calculator is modelling

An offset calculator models one simple mechanism. Each day your lender subtracts the balance of your linked offset account from your loan balance, then charges interest on what is left. You do not earn interest on the offset money. You avoid paying it. Four things decide how much that is worth, and the last two are the ones a calculator cannot know without your help.

Loan balance and rate

These set the price of every dollar you owe. Interest is charged on the loan balance after the offset comes off, at your loan rate, so the same offset balance is worth more on a higher rate.

Offset balance

The money sitting in the linked account. It works like an everyday account, so the balance moves with your pay, bills and spending. The honest input is your realistic average, not your best month.

Time in the account

Interest on most home loans is calculated daily, so a balance only counts for the days it is actually there. Savings left untouched save far more than salary that lands and is spent within a fortnight.

How much of it is offset

A 100 per cent offset counts every dollar. A partial offset counts only a share of the balance, 40 per cent for example, and is generally offered with fixed rate loans. If yours is partial, count only that share.
Offset money is still your money, which is the point, and also why the result is easy to overstate. Run the calculator with the balance you keep in a normal month, then run it again with half of that. The gap between the two answers is your real uncertainty.

If you would rather pay money straight onto the loan, compare the two routes on the extra repayment calculator.

Is your offset actually working?

In July 2026 ASIC published Report 837 after reviewing how eight banks set up and manage mortgage offset accounts. Those banks hold more than 70 per cent of the home loan market. ASIC found weaknesses at every bank it reviewed, and banks paid over $55 million in compensation for offset failures reported between September 2023 and August 2025, with more expected.

Most of the failures were quiet ones. Of the failures the banks identified, 55 per cent were offset accounts opened but never linked to the loan, and 22 per cent were accounts never opened at all. Another 14 per cent were linked outside the timeframe the customer was told.

It stays hidden because your repayment does not change. Only the interest inside it does.
Interest a 100 per cent offset should save you each year

= average offset balance × loan rate

Divide by 365 for a daily figure. Use your average balance and the rate on your loan statement. If your statements show nothing close to this, ask your lender to explain the difference.
Three quick ways to check.

First, open your banking app or latest statement and look for the interest saving from the offset. ASIC’s first suggestion is to check online banking, then raise it with the bank if the information is not there.

Second, compare it with the formula above. An average of $50,000 against a 6.25 per cent loan should avoid about $3,125 over a year, which is the size of the error in ASIC’s own example.

Third, check again after any change. Refinancing or switching products can break the link, so ask the bank to re-link it. If you are refinancing, our refinancing page covers what to line up first.

What each offset balance is worth

Most pages show one saving figure for one set of numbers. Each card below takes one offset balance and shows the interest it avoids in a year at five loan rates, from 5.0 to 7.0 per cent, so you can read off the figure closest to your own loan. Each figure is the balance multiplied by the rate, on a 100 per cent offset.

The rates are illustrative and are not offers. Your own rate is on your loan statement.

$10,000 in the offset

At 5.0 per cent  $500
At 5.5 per cent  $550
At 6.0 per cent  $600
At 6.5 per cent  $650
At 7.0 per cent  $700

a year in interest avoided, before any fees

$25,000 in the offset

At 5.0 per cent  $1,250
At 5.5 per cent  $1,375
At 6.0 per cent  $1,500
At 6.5 per cent  $1,625
At 7.0 per cent  $1,750

a year in interest avoided, before any fees

$50,000 in the offset

At 5.0 per cent  $2,500
At 5.5 per cent  $2,750
At 6.0 per cent  $3,000
At 6.5 per cent  $3,250
At 7.0 per cent  $3,500

a year in interest avoided, before any fees

$100,000 in the offset

At 5.0 per cent  $5,000
At 5.5 per cent  $5,500
At 6.0 per cent  $6,000
At 6.5 per cent  $6,500
At 7.0 per cent  $7,000

a year in interest avoided, before any fees

$200,000 in the offset

At 5.0 per cent  $10,000
At 5.5 per cent  $11,000
At 6.0 per cent  $12,000
At 6.5 per cent  $13,000
At 7.0 per cent  $14,000

a year in interest avoided, before any fees
Read across the $50,000 card. One percentage point of rate is worth $500 a year on it. Doubling the balance to $100,000 adds $3,000 at 6.0 per cent. The balance does more work than the rate, and the balance is the one thing you control.

These figures assume the money stays in the account all year. Most balances move, so use your average. They also ignore fees and any extra rate charged for the offset loan, and the worked example below puts a number on the tax side, then the section after it on the cost.

Worked example: $50,000, two places to keep it

The figures below are illustrative and are not a rate offer, a quote, or tax advice. They show how the arithmetic behaves.

Take a $600,000 home loan at an assumed 6.25 per cent over 30 years, with $50,000 of savings. The repayment is about $3,694 a month. Assume the savings stay put, and compare two places to keep them.

In a 100 per cent offset account
Interest avoided in the first year: $3,125, and it is not taxed.
Held for the whole loan with the repayment unchanged, the loan clears about 4 years and 10 months sooner and total interest falls by about $217,900.

In a savings account paying 4.50 per cent interest, taxed at a 32 per cent marginal rate
Interest earned: $2,250. Tax: $720. Kept: $1,530.

The offset is ahead by $1,595 a year. To match it, the savings account would have to pay about 9.19 per cent before tax. The 32 per cent is the 30 per cent bracket plus the 2 per cent Medicare levy.
That gap is why an offset can beat a savings account even when the savings rate looks competitive. It holds only while the offset costs you little. Check which bracket you are in on the Australian income tax calculator, and compare a savings rate on the savings goal calculator.

What the calculator does not show you

A saving figure is one input into an offset decision. These are the others, and every one of them can move the answer.

What the offset costs

Moneysmart notes that some banks charge for offset features through a higher rate, account fees, or both. The break-even balance is the yearly cost divided by your loan rate. A $400 fee needs about $6,400 in the account at 6.25 per cent. A rate premium of 0.20 of a percentage point on a $600,000 loan adds $1,200 a year and lifts the break-even to about $25,600.

Offset or redraw

A redraw facility holds extra repayments you have paid onto the loan, and you may be able to withdraw them depending on your loan terms. An offset keeps savings in a separate account you can reach any time. Compare fees, rate and access rules for each.

Investment loans are taxed differently

On an investment loan the interest is generally deductible, subject to the tax rules that apply to your property, and the ATO says the deduction cannot exceed the reduced interest you actually incur after the offset. So the saving is not tax free in the same way: less interest means a smaller deduction. How you fund an investment from a home loan or its offset can also change what is deductible, so ask your accountant first. Our investment property loan page covers the lending side.

Your balance will move

The calculator takes one balance. Real balances swing with pay cycles, tax bills and holidays, which is why an average is the honest input. Some people run spending through a credit card and repay it in full to keep more in the offset. Moneysmart puts average card rates above 18 per cent as at May 2026, so it only works if you clear the card every month. Test it on the credit card calculator first.

Before you compare accounts

Most offset calculators stop at a saving figure. Ask each lender for the loan rate with and without the offset, every annual and monthly fee, whether the offset is 100 per cent or partial, and where you will see the interest saving on your statements. Then run the options side by side on the same balance, and check the details again after any refinance or product change.
Related tools on this site: loan repayment calculator, extra repayment calculator, mortgage refinance calculator, loan comparison calculator and the borrowing power calculator.

If you want the numbers checked against a real loan, see refinancing your home loan, buying a home, investment property loans or home loans in Adelaide.
Sources
Australian Securities and Investments Commission: Media release 26-173MR and Report 837, Offsets, out of mind, for the review findings, the failure types and the $55 million in compensation. ASIC also publishes a plain-language check for borrowers.
Moneysmart: Mortgage offset accounts, for how offsets work, what they can cost and how they differ from redraw.
Westpac: What is an offset account, for 100 per cent and partial offsets.
Australian Taxation Office: Taxation Ruling TR 93/6, on loan account offset arrangements, Rental property interest expenses, and Tax rates for Australian residents.
Australian Financial Complaints Authority: AFCA, the free external dispute service for financial complaints.

About the figures on this page. Every annual saving is the balance multiplied by the rate. The loan-term example uses monthly interest on the balance after the offset, with the repayment held fixed. It reproduces ASIC’s own worked example, $750,000 at 6.25 per cent with a $50,000 offset, to within rounding: about four years sooner and about $227,000 of interest. Tax figures use the 30 per cent bracket, which is the same in 2025-26 and 2026-27, plus the 2 per cent Medicare levy. The rates, fees and balances used are illustrative and are not an offer.
Important information. This page and calculator provide general information only. They are not credit, financial or tax advice and do not take your objectives, financial situation or needs into account. Results are estimates based on the figures you enter and the assumptions stated on this page. Actual interest depends on your lender’s terms, and interest rates, fees and offset features vary by lender and loan and change over time. Tax outcomes depend on your circumstances, so speak to a registered tax agent or accountant. Mentioning a product feature is not a recommendation of any product. Loanity is a credit representative and can provide credit assistance once we understand your situation.
STILL GOT QUESTIONS?

Offset account questions, answered

How much will an offset account save me?

On a 100 per cent offset, roughly your average offset balance multiplied by your loan rate, each year. An average of $50,000 against a 6.25 per cent loan avoids about $3,125 of interest in the first year. Any fee, or any extra rate charged for the offset feature, comes off that figure, and the calculator above works through the longer-term effect.

It can be if you have a large loan, keep a regular savings balance and want flexible access to the money. It may not be if your balance is usually low, the loan carries higher fees for the offset feature, or the rate is higher than a similar loan without one. Moneysmart’s advice is to compare the cost of the fees with the interest you expect to save.

No. The benefit is interest you avoid paying, not interest you earn, and the ATO’s Taxation Ruling TR 93/6 describes these products as generally structured so the customer is not liable to income tax on it. Investment loans work differently, because the interest is deductible and a smaller interest bill means a smaller deduction. Your accountant can confirm your position.

An offset is a separate transaction account linked to your loan. Your savings stay in it and reduce the amount of the loan that is charged interest. A redraw facility holds extra repayments you have paid onto the loan, which you may be able to withdraw depending on your loan terms. Check your lender’s fees, rate and access rules for each.

Check your online banking, app or statements for three things: the offset account exists, it is linked to the correct loan, and it is showing an interest saving. ASIC found offsets that were opened but never linked, never opened, or linked late. If the saving is missing or looks too small, ask your bank to explain it. If that does not resolve it, you can complain to the bank and then to AFCA, which is free for consumers.

They can cost more. Some lenders charge for offset features through a higher rate, an annual or package fee, or both. The benefit also depends on keeping a balance in the account, so a small or constantly spent balance may not cover the extra cost. And because the money is easy to reach, it is also easy to spend.

Offsets are generally available with variable rate loans. Some lenders offer a partial offset on certain fixed loans, which counts only a share of your balance against the loan, such as 40 per cent. Ask whether the offset is 100 per cent or partial before you compare rates.

Not automatically. ASIC and Moneysmart both warn that refinancing or switching loan products can break the link between an offset account and the loan, and you may need to ask the bank to re-link it. After any change, check your next statement for the interest saving. The mortgage refinance calculator and our refinancing page cover the wider costs of switching.

Some lenders offer one with investment loans, so check the product. The tax treatment differs from a home loan. Because the interest on an investment loan is generally deductible, subject to the rules that apply to your property, the ATO says the deduction cannot exceed the reduced interest you actually incur after the offset. How you fund an investment purchase from a home loan or its offset can also change what is deductible, so speak to your accountant first. Our investment property loan page explains how we approach the lending side.

We do not charge you a fee for arranging your home loan. Brokers are generally paid a commission by the lender when the loan settles. Lenders may charge their own establishment, annual or package fees, and those are disclosed to you before you commit. If any fee from us would ever apply, you would be told in writing beforehand.