How our offset account calculator shows you how much you can save
This offset calculator provides you with an estimate of the potential interest saving and reduction to your home loan term by having money in an offset account.
Assumptions used
- Offset Account, Contributions and Extra Repayments: The calculator does not take into account any interest that may be earned on an offset savings account balance, nor do we take into account any extra repayments made on the loan.
- Mortgage repayments: For whatever mortgage repayment frequency you select (weekly, fortnightly or monthly) we calculate the repayment using principal and interest. For simplicity, we calculate this using 52 weeks and 26 fortnights in a year.
- Savings: The offset calculator calculates the difference between a standard mortgage schedule and the schedule with the impact of a mortgage offset account factored in. The total interest saved amount shown = Total interest paid on standard mortgage - Total interest paid on mortgage with offset account.
How to use the offset calculator
To use our calculator, you’ll need to enter some details about your home loan. This includes your offset account balance and how often you’ll be making deposits.
Loan balance
How much do you currently owe on your home loan?
Interest rate
What's the interest rate you pay on your home loan?
Repayment frequency
Do you make monthly, fortnightly or weekly mortgage repayments?
Years remaining
How many years do you have left on your home loan?
Offset account balance
How much money you currently have in your offset account, including your savings.
Regular offset account deposits
How much money you’re going to deposit into your offset account and how often. This could be savings, lump sum payments like tax returns or other income streams.
Once you’ve entered these details, our offset account calculator will give you an estimate of the total interest you could save, as well as how many years and months you could cut off your home loan.
How is an offset account calculated?
Interest on your home loan is calculated daily, so the amount you pay can change each day based on your current offset account balance. When you keep money in your offset account, it reduces the amount of your loan balance that interest is calculated on, meaning you pay interest on a smaller amount.
While interest is calculated daily, it’s applied monthly to your loan. So, if you have a $30,000 balance in your offset account for part of the month, like 10 days, it will only reduce the interest for that amount for those 10 days. This means the longer your balance stays in the account, the more interest you save.
- Imagine your home loan balance is $600,000 with an interest rate of 6.00% p.a.
- You have $30,000 in your home loan offset account. The bank will subtract that from the loan balance to arrive at the amount that interest will be charged on.
- Your annual interest rate is then converted into a daily interest rate: 6% / 365 = 0.000164
- Now it’s time to calculate the daily interest amount for the loan balance minus the amount in the offset account: 570,000 x 0.000164 = 93.48 (the daily interest amount for the loan balance without the offset account would be 600,000 x 0.000164 = 98.4)
- The bank then adds up the daily interest charges for the month to arrive at the monthly interest that will be added to your loan. For simplicity, let’s assume the loan balance and offset balance remain the same for the full month, meaning the calculation would be 93.48 x 30 (or however many days are in that month) = $2,804.40
- In this example, having $30,000 in your offset account means saving $147.60 in interest for the month – $2,804.40 instead of $2,952.
Calculating your offset account savings
Here are some examples of how much an offset account can save you, including the estimated total interest and the time saved on your loan.
Loan amount | $400,000 |
|---|---|
Interest rate | 6.50% |
Offset account balance | $20,000 |
Interest saved over loan term | $102,643 |
Time saved on loan term | 3 years, 4 months |
Loan amount | $600,000 |
Interest rate | 6.50% |
Offset account balance | $30,000 |
Interest saved over loan term | $153,964 |
Time saved on loan term | 3 years, 4 months |
Loan amount | $800,000 |
Interest rate | 6.50% |
Offset account balance | $40,000 |
Interest saved over loan term | $205,285 |
Time saved on loan term | 3 years, 4 months |
Loan amount | $1,000,000 |
Interest rate | 6.50% |
Offset account balance | $50,000 |
Interest saved over loan term | $256,606 |
Time saved on loan term | 3 years, 4 months |
| Loan amount | Interest rate | Offset account balance | Interest saved over loan term | Time saved on loan term |
|---|---|---|---|---|
$400,000 | 6.50% | $20,000 | $102,643 | 3 years, 4 months |
$600,000 | 6.50% | $30,000 | $153,964 | 3 years, 4 months |
$800,000 | 6.50% | $40,000 | $205,285 | 3 years, 4 months |
$1,000,000 | 6.50% | $50,000 | $256,606 | 3 years, 4 months |
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