Home Loan Offset Calculator

Enter your loan balance, interest rate, remaining term and offset balance, with a regular monthly top-up if you make one, to see the time and interest saved against the scheduled loan. The scheduled loan uses the same amortised calculation as the rates in our tables. Estimate only, not credit advice.

Any term from 1 to 40 years.

Held in the offset account today.

Optional. Added to the offset each month.

$500,000 over 30 years at 6.00% p.a., with $50,000 in offset

Interest saved against the scheduled loan

Time saved
5 years 4 months
Interest saved
$194,606
Paid off in
24 years 8 months
Scheduled repayment
$2,998 a month
Scheduled interest
$579,191
Interest with offset
$384,585
Compare Home Loans With an Offset

Estimate only, based on an amortised principal and interest loan with monthly repayments, at the rate you entered for the whole term. The repayment stays as scheduled and the offset balance is assumed to stay in the account, so taking money out would lower these figures. Fees are not included, and loan features and limits vary by lender. This is general information, not credit advice.

$0$125k$250k$375k$500k051015202530Years from todayBalance still owing
  • With the offset
  • Scheduled loan
Read it left to right: the years along the bottom, what is still owing along the side. The dashed line is the scheduled loan and the solid line is the same loan with the offset.

How we calculate this

The formula

New balance = B + max(B − O, 0) × r − M
B
the balance at the start of the month
O
the offset balance, including any top-ups so far
r
the monthly interest rate, which is the annual rate divided by 12
M
the scheduled monthly repayment, which does not change
P
the balance today
n
the scheduled number of monthly repayments left

The repayment is sized on the balance and term, the same as our Home Loan Repayment Calculator, and the results compare against that schedule:

  • M equals P times r times one plus r, to the power n, all divided by one plus r, to the power n, minus one
  • Scheduled interest = M × n − P
  • Interest saved = Scheduled interest − the interest charged until B reaches zero
  • Time saved = n − the months until B reaches zero

What we assume

  • The repayment stays as scheduled. The offset lowers the interest charged, not the repayment, so more of each repayment comes off the balance and the loan clears sooner. Some lenders can lower the repayment instead, which is not modelled.
  • The offset is counted in full, and never drawn on. Every dollar reduces the balance interest is charged on, down to zero, and anything above the balance saves nothing more. The balance is assumed to stay in the account, so taking money out would lower the saving. A partial offset is not modelled.
  • A top-up joins at the end of the month. Each monthly top-up is added after that month’s interest is charged, and it continues at the same amount until the loan clears.
  • The loan has an offset account. Not every home loan offers one, and a loan that does may carry a package or account fee, or a higher rate. Tax on interest the same money could have earned elsewhere is not modelled.
  • The rate never changes. The rate you enter is applied for the whole term. A variable rate will move, and a fixed rate reverts at the end of the fixed period, and either would change these figures.
  • Fees are excluded. Account and package fees are not included, nor are any break costs. A fee would reduce what is saved.
  • Monthly repayments, charged monthly. Interest is worked out once a month on the balance at the start of the month. Lenders usually calculate it daily and charge it monthly, so a real loan will differ a little.
  • A part month counts as a month. Time saved is counted in whole monthly repayments. The last repayment is only what is still owing, which can save some interest without taking a full month off the term.

A worked example

A home loan balance of $500,000 at 6.00% p.a. with 30 years to run, and $50,000 in an offset account with no top-ups.

  1. Work out the scheduled repayment$500,000 over 360 months at 6.00% p.a.M = $2,997.75 a month
  2. Work out the first month’s interest, on the balance less the offset($500,000 − $50,000) × 0.005000$2,250.00 of interest
  3. Take off the same repayment$500,000 + $2,250.00 − $2,997.75$499,252.25 owing after month one
  4. Repeat each month until nothing is owingThe same step on the new balance, adding up the interest as it goes296 months, and $384,585 of interest
  5. Compare with the scheduled loan$579,191 − $384,585, and 360 − 296 months$194,606 of interest and 64 months saved

Figures above are rounded for reading, so a line can differ by a dollar from the exact arithmetic. The calculator itself works to full precision.

Holding $50,000 in an offset account against $500,000 at 6.00% p.a. clears the loan in 24 years 8 months rather than 30 years, with $194,606 less interest.