Offset Calculator
Estimate how much interest an offset account could save and how much sooner your loan could be repaid.
Your loan and offset
Compare the same monthly repayment with and without an offset.
Your offset estimate
Example inputsCorrect the invalid fields. Your offset estimate is unavailable until the inputs are valid.
- $90,035
- Over the loans' lives, before additional fees. A negative amount means more interest.
- $90,035
- 30
- A negative number means a later payoff.
- $2,997.75
- 330
Compare total interest
Interest over each loan's life, using the same monthly repayment.
Your comparison
| Estimate | Amount |
|---|---|
| Interest without offset | $579,191 |
| Interest with offset | $489,156 |
| Extra fees | $0 |
| Opening interest-bearing balance | $480,000 |
How an Offset Reduces Interest
An offset account reduces the loan balance used to calculate interest. The cash stays in a separate account, while the loan principal falls through repayments. With a full offset, $50,000 against a $750,000 loan leaves $700,000 attracting interest.
This offset calculator multiplies the account balance by the offset percentage you enter. It caps that reduction at the outstanding loan balance. At 50%, the same $50,000 reduces the interest-bearing balance by $25,000.
At 6%, those two examples produce monthly interest of $3,500 and $3,625 respectively. The model divides the annual rate by 12. Lenders commonly calculate interest daily, as Moneysmart's offset account guide explains.
An Offset Mortgage Example
Keeping the same repayment lets an offset reduce interest and direct more of each payment towards principal. The starting example uses a $500,000 loan at 6% over 30 years, with a constant $20,000 full offset.
The calculated monthly repayment displays as $2,997.75. The comparison keeps its full calculation precision and adjusts each loan's final payment to clear the remaining balance.
| Estimate | Without offset | With offset |
|---|---|---|
| Total interest | $579,191 | $489,156 |
| Months to repay | 360 | 330 |
| Interest saved | $0 | $90,035 |
| Extra fees | $0 | $0 |
The offset saves an estimated $90,035 and brings repayment forward by 30 months under these assumptions. The $20,000 remains separate cash throughout. Even when the offset covers the remaining balance, repayments must still clear the principal.
This mortgage repayment calculator with offset holds the repayment constant. It does not lower your monthly payment automatically. Download the comparison as a comma-separated values (CSV) file to inspect both monthly schedules in Excel or another spreadsheet.
Fees and a Different Interest Rate
The net benefit subtracts the extra costs you enter from the interest saved. Enter only costs above those of the loan without an offset. A higher rate applies to the offset scenario, while both scenarios keep the same repayment.
For example, a $10 extra monthly fee over the starting 330-month offset loan costs $3,300. With no other changes, the estimated net benefit falls to $86,735. The fees are paid separately and do not reduce the principal.
A rate margin can reduce the saving or make it negative. The result compares both loans through repayment, so an offset that delays payoff also incurs monthly fees for longer. The model excludes interest you could earn elsewhere on the cash.
Changing Offset Balances
Use a realistic average offset balance when your account moves with salary and spending. The optional monthly change models a regular increase or withdrawal. Month one uses the opening amount, then each later month applies the change before calculating interest.
For example, a $20,000 opening balance with a $500 monthly increase uses $20,500 in month two and $21,000 in month three. Withdrawals reduce the balance towards zero. Excess cash never creates negative loan interest.
A monthly average cannot reproduce the dates of daily deposits and withdrawals or different month lengths. The estimate assumes the same loan rate throughout. For a planned cash withdrawal, compare a lower balance as well as your usual average before relying on the projected saving.