Free Mortgage Calculator with Offset Account

What is an offset account?

An offset account or offset sub-account is a transaction account that's linked to your home loan. Instead of accruing interest like a traditional bank account, the money in your offset account is offset against the balance of your mortgage.

Some banks and financial institutions will offer a 100% offset account, which means 100% of the funds the account is being used to offset your home loan. These are usually linked to a variable rate loan, although you can use a 100% offset account with a fixed rate home loan in some cases.

Should I use an offset account with my home loan?

The more money you have in your offset account, the less interest you will need to pay on your home loan. This means that you will be able to pay back your mortgage faster since more of your repayments are going towards paying down the principal loan amount.

For example, let's say you had a home loan of $400,000 and a 100% offset account with $50,000 deposited. Because of the funds in your offset account, you will only be charged interest on $350,000.

Using an offset account allows you to pay interest on a smaller sum, saving you money and helping you pay off your mortgage quicker.

How does this offset calculator work?

This home loan offset calculator works by reducing your loan amount by the sum in your offset account before providing an estimate of your weekly, fortnightly, or monthly repayment. The interest rate you input will only be applied to the offset loan amount.

Your results will appear as follows:

Monthly/Weekly/Fortnightly Repayment: An estimate of your minimum mortgage repayments.

Interest Saved: The amount of offset interest that you no longer need to pay.

Time Saved: The amount of time saved by reducing the amount of interest payable.

Revised Time: The revised loan term minus the time saved.

How accurate is this calculator?

This offset calculator is designed to estimate how much time and money you can save linking an offset account to your home loan. The calculator works on a series of assumptions, including:

Upfront or ongoing fees and charges are not taken into account.
The interest rate remains the same over the life of the loan.
Interest is calculated by compounding the same repayment frequency, which may not be true in practice.
A year consists of 26 fortnights, 52 weeks, and is counted as 364 days.
No rounding takes place during calculation, while repayments are rounded to the nearest cent in practice.

Because of the various fees and charges different financial institution package with their home loans, a calculator can't give you a precise answer. Therefore, the results you get from this offset calculator should only be used to indicate what you can save using an offset account.

Frequently Asked Questions

How much do you save with an offset?

How much you save with an offset account depends on your home loan details and how much you have deposited. You will pay less interest on the principal sum you owe for every cent in your offset account.

Does an offset account reduce monthly repayments?

Your monthly repayments will typically stay the same when you link your home loan to an offset account. While your repayments may not change, you won't need to make as many of them since more of your principal is being paid down.

Can I offset 100% of my mortgage?

No. If you could offset 100% of your mortgage, you wouldn't need to borrow any money in the first place.

Can you have two offset accounts?

Some lenders may encourage you to open more than one offset account. It's not uncommon for people to replace their traditional bank accounts with offset accounts, meaning that they have one for savings, one for everyday spending, and one for monthly bills etc.

How much should you have in an offset account?

Because of the massive interest savings offered by using an offset account, home loans with a 100% offset option usually have higher interest rates and fees to make up for this. Due to these additional costs, you should aim to have a minimum of $10,000 in your offset account to make it worthwhile.