Offset Account Calculator
Model an offset balance and regular deposits against your mortgage: interest saved, time saved and the cash that stays available, kept apart from principal.
Repay interest only for the first years, then principal and interest.
Cash sitting in the offset account. It stays yours and is never treated as a repayment.
Cash taken back out. Interest rises from that date, because the balance stops being offset.
Enter your loan and an offset balance or regular deposit to see the interest and time saved.
Summary
Two ledgers run on identical dates: one with the offset balance and deposits, one with neither. Offset cash reduces the interest-bearing balance under §13.9 while staying yours to withdraw.
Working
- §13.5 payment: the scheduled repayment solves P = B·i ÷ (1 − (1 + i)^−n) from the balance B, the periodic rate i and the remaining periods n.
- §13.7 recurrence: each period: interest = accruing balance × i, then closing = opening + interest + fees − payment − extra repayment.
- §13.9 offset: interest accrues on max(0, balance − offset × effectiveness), floored at zero; offset cash is never a principal repayment.
- §12.5.8 reconciliation: the ledger identity is checked on every period. A reconciliation failure invalidates the result rather than warning about it.
- §12.6 offset vs principal: a deposit to offset lowers the accruing balance but not the debt; an extra repayment lowers the debt and cannot be withdrawn unless redraw allows it.
Assumptions
- Interest accrues once per repayment period on the payment-period ledger. Daily accrual is not modelled at P0.
- The first repayment falls on 1 October 2026; every date in the schedule follows from that and the repayment frequency.
- The rate is held constant except where a dated rate-change event moves it.
- Weekly, fortnightly and monthly frequencies use 52, 26 and 12 periods per year.
Limitations
- Lender daily accrual, transaction timing, fee timing and rounding can differ from this model; compare the settings with your loan contract and statements.
- Redraw availability, offset eligibility conditions, break costs and any lender fee that was not entered are not modelled.
- Amounts beyond the entered term are not projected; a balance left unpaid at term is reported rather than extended.
Common questions
What is an offset account and how does it reduce interest?
An offset account is a transaction account linked to your home loan whose balance is netted against the loan balance before interest is charged. This calculator applies that netting in every repayment period of a scheduled ledger, so a dollar sitting in the offset removes a period of interest on a dollar of loan without repaying any of it. The interest saved compounds, because a smaller interest charge leaves more of each repayment to reduce principal.
Is an offset account better than making extra repayments?
On interest alone the two are close, because both reduce the balance that interest is charged on. The calculator runs both on the same loan and shows the interest saved and time saved for each. The difference is access: offset money stays yours to withdraw at any time, while money paid into the loan is gone into the balance and redraw depends on your contract. The extra repayments calculator prices the other side of that comparison in full.
How much do I need in an offset account for it to be worth it?
Enter your offset balance and the calculator prices the exact interest saved over the life of the loan against a baseline with no offset. Because the saving scales with the balance and the rate, there is no universal threshold. The figure to weigh it against is the account fee or the interest you forgo elsewhere, which you enter yourself. The result also shows the cash still sitting in the offset, labelled as available rather than repaid.
Does money in an offset account reduce my loan balance?
No. The loan balance is unchanged and the offset money remains in your account. Only the interest calculation treats the two as netted, which is why the schedule shows the offset cash separately from principal in every row. Withdrawing from the offset raises the interest charged from that period onward, and the calculator applies a one-off withdrawal on the date you set.
How is offset interest calculated on this site?
The offset is applied against the loan balance in each repayment period of the ledger, and interest is charged on the netted amount for that period. Daily accrual is not modelled in this release, so contracts that offset daily and debit monthly will differ by small amounts, which the limitations panel states on every result. The working panel shows the netted balance and the interest charge for each period.
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