The best place to park it
Cash you might need at short notice earns your loan rate in an offset instead of a savings rate — usually the better return, with no interest income to report. It also stays accessible, which a lump-sum repayment does not.
Tool 06 · Repayments
Mortgage offset
An offset account is an everyday transaction account linked to your loan. Every dollar sitting in it is treated as a dollar you do not owe, so you are charged less interest — while the money stays yours to spend.
Helps you work out: how money sitting in an offset account cuts your interest and shortens your loan.
My loan & offset
Revised term
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Interest you could save
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Time you could save
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My loan
Repayments
Offset & extra repayments
General advice warning
The results provided by this calculator are estimates only and should not be taken as personal financial advice. The calculations are based on the assumptions you have entered and do not take into account your personal objectives, financial situation or needs. Before making any financial decisions, we recommend you consult with a qualified financial adviser. Financial Elements PTY LTD (Corporate Credit Representative Number 499510) is an Authorised Corporate Credit Representative of BLSSA Pty Ltd (Australian Credit Licence 391237).
Reading your result
What an offset balance is worth
The value of an offset is your loan rate applied to whatever sits in it. Because it is interest you avoid rather than income you earn, there is nothing to declare on it.
Every day counts
Because interest is worked out on the daily balance, running your pay through the offset and paying bills late in the cycle helps even when the average balance is modest. The saving is small per day and meaningful per decade.
Not the same thing
Redraw sits inside the loan: the money has been repaid and you ask for it back, and the lender can change those terms. An offset is a separate account you control. For investment properties the distinction also affects how interest is treated, so take advice before choosing.
Method & assumptions
How this calculator works
Usually not. Your repayment normally stays the same and more of it goes to principal, so the loan finishes earlier. Some lenders will recalculate the repayment down instead — worth asking which applies to your product.
No. Interest is calculated on each day's balance, so the benefit accrues while the money is in the account and stops when you spend it. The calculator assumes the balance you enter stays put, so treat the result as an upper bound.
Rarely. Offsets usually come with a package or annual fee, and occasionally a slightly higher rate. If the balance you would realistically hold is small, the fee can outweigh the saving — that is a straightforward sum worth doing before you commit.
Some accounts offset only part of the balance. Check the product terms: a 100% offset is the standard to compare everything else against.
No, and for an owner-occupier it does not need to — the benefit is interest you never pay rather than income you earn. If the loan is against an investment property, less interest also means a smaller deduction, so speak to your accountant.
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Ready when you are
Is an offset worth the package fee?
That depends on the balance you would realistically hold and what the feature costs. We will do the sum against your numbers, across the lenders on our panel.