Show clients exactly how much interest an offset account saves them — and how many years it shaves off the loan — while keeping their money accessible.
The loan & offset
Interest saved over the loan
How brokers use this
- Justify the package fee. Offset loans often carry an annual fee. Show the interest saved dwarfs the fee, and the objection disappears.
- Win the “why not just pay it down” debate. Offset saves the same interest as extra repayments but keeps the cash available — perfect for clients who want a buffer.
- Set up the future investor. If a client might turn the home into a rental later, an offset preserves deductible debt far better than paying down the loan. Great Best Interest Duty reasoning to document.
- Turn a salary into savings. Show that parking their pay in the offset between bills quietly cuts interest — an easy behaviour change with real payoff.
How an offset account works
An offset account is a transaction account linked to your home loan. Every dollar sitting in it is “offset” against your loan balance for the purpose of calculating interest. If you owe $600,000 and hold $50,000 in the offset, you’re only charged interest as if you owed $550,000 — but you can still withdraw that $50,000 whenever you need it.
Because your repayment stays the same but less of it goes to interest, more goes to principal, so the loan is repaid faster and you save interest over its life. This calculator runs a month-by-month simulation assuming a steady average offset balance, then compares total interest and payoff time against the same loan with no offset.
Frequently asked questions
Is an offset better than redraw or extra repayments?
They save a similar amount of interest. The difference is access and flexibility: money in an offset is your own savings and stays fully accessible, while extra repayments/redraw sit inside the loan and can be subject to lender conditions. Offset is often preferred where liquidity or future tax-deductibility matters — a broker can advise for your situation.
Does an offset account cost money?
Offset accounts are often bundled into a package loan with an annual fee (commonly a few hundred dollars). For borrowers with a reasonable offset balance, the interest saved usually far exceeds the fee — this calculator helps you check.
Do I need a big balance for it to help?
No. Every dollar helps from day one. Even parking your salary and bill money in the offset between pay cycles reduces the average balance you’re charged interest on.
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Disclaimer: This calculator provides estimates for general information only and is not credit assistance or financial advice. It assumes a constant interest rate and a steady average offset balance, and does not include fees. Actual savings depend on your balance over time, the rate, and lender terms. Confirm with the lender or a licensed mortgage broker.