Offset Account Calculator
Find out how much interest and time an offset account could save on your home loan, and what tax-free return it's really earning you.
What you owe, less your offset
Assumes your repayment stays the same, your rate doesn't change and the money stays in the offset. The loan counts as cleared once your offset balance matches what you owe, because you could pay it out at that point.
Printed from ClearCalc (clearcalc.com.au/offset-calculator/). Estimates only, not financial advice.
How an offset account works
An offset account is an everyday transaction account linked to your home loan. Each day, the lender subtracts the offset balance from your loan balance before working out interest. With $600,000 owing and $30,000 in offset, you're only charged interest on $570,000.
Your repayment usually stays the same, so the interest you don't pay goes towards the principal instead. That's why an offset shortens your loan as well as cutting interest. On a $600,000 loan at 6.0%, keeping $30,000 in offset and adding $300 a month could save more than $230,000 in interest and about eight years.
Why the saving is better than it looks
Interest saved in an offset isn't income, so it isn't taxed. Money in a savings account earns interest that is taxed at your marginal rate. To match a 6.0% offset, someone on the 32% tax rate (including Medicare) would need a savings account paying about 8.8% before tax, with no risk. The calculator works this out for your rate.
Offset or extra repayments?
- Same interest saving for every dollar, as long as the money stays put.
- Offset keeps it flexible. The money is still yours to spend in an emergency, without redraw rules.
- Better if you'll rent the home out later. If your home becomes an investment property, money in the offset can be moved out without reducing the tax-deductible loan. Redrawn extra repayments can be treated as new borrowing.
- Watch the fees. Offset loans often come with a package fee of $300–$400 a year or a slightly higher rate. On a small balance, the fee can cost more than you save.
Compare with paying extra off the loan using the extra repayments calculator, or see whether investing beats the offset with the invest vs offset calculator. The home loan calculator shows your full repayment schedule.
Estimate only. Lenders work out offset interest daily, and your balance will move up and down during the month, so real savings will differ.
Frequently asked questions
How much does an offset account save?
It saves interest at your home loan rate on every dollar in the account. $30,000 sitting in offset on a 6.0% loan saves about $1,800 in the first year, and much more over the life of the loan because the balance falls faster.
Is offset interest saving taxed?
No. You're saving interest you would otherwise pay, not earning income, so there's no tax. That makes an offset worth more than a savings account paying the same rate.
Do I need to keep a minimum in my offset?
No, but the saving is only on what's in there each day. Many people pay their salary into the offset and use a credit card for spending, then pay it off in full, to keep the balance higher for longer.
Is a partial offset worth it?
Some loans offset only part of your balance, such as 40%. The saving is lower, so compare it with a loan with a full offset or simply a lower rate.
Official sources used for this calculator include: Moneysmart – Home loans, APRA – Australian Prudential Regulation Authority, Housing Australia – Home Guarantee Scheme. See how we calculate.
Reviewed by the ClearCalc team. Last reviewed October 2026. This calculator gives an estimate for general information only. Check important figures with the relevant government agency or a licensed professional.