Offset Calculator

Find out how much you could save each month and over the lifetime of your loan if you had an offset account.

An offset account is a type of savings or transaction account that is linked to your home loan. The money in this account offsets your home loan balance to reduce the interest you are charged each month.

The more money sitting in your offset account, the less interest you will pay. As with a regular transaction account, you still have the flexibility to make deposits or withdrawals. The account allows you to use cash you have saved, or reserved for living expenses, to pay less interest on your home loan.

Calculate your savings with an offset account

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%

years

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How much you’ll contribute to your offset each month after expenses

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/ month

Only applicable if you don’t set up an offset account at the same time as your loan

years

Understanding offset accounts

1. What is an offset account?

An offset account is an account linked to your home loan that operates like a transaction or savings account. The money in this account ‘offsets’ your home loan balance, which reduces the amount of interest you’re charged.

2. How does a mortgage offset account work?

The easiest way to understand how an offset account works is to look at an example.

Let’s say you have a remaining home loan balance of $350,000. You’ve put your $25,000 in savings into your offset account. 

Your $25,000 offsets the $350,000 remaining on your home loan, so you’re only charged interest on $325,000, not $350,000.

Just like a regular transaction or savings account, you can transfer money in and out of your offset account at any time. 

The interest you’ll pay is calculated daily when you have an offset account. So, if the amount of money in the account varies, the amount of interest you pay will too.

3. What are the disadvantages of an offset account?

An offset account can be a good way to reduce the interest you pay on your home loan, but there can be disadvantages.

You may have to pay an account keeping fee or an annual fee if your offset account is part of a home loan package. It’s worth considering whether the fees attached will outweigh the savings in interest you’ll receive from the offset account.

To make the savings worth it, you typically need to have a substantial sum in your offset account. It could be a good idea to consider if you’ll be able to maintain this amount, or whether you’d be better off putting your money in a savings account to earn interest.

Offset accounts can have limits too – for example, there might be withdrawal limits or limits on how much of the money in your account is used to offset your home loan.

4. Are offset accounts worth it?

Whether or not an offset account is worth it will mostly depend on how much money you can afford to put in the account, as well as your home loan balance and interest rate.

It could be worth doing some calculations to work out if the savings will make financial sense.

To help you, here are some of the pros and cons of offset accounts:

Pros

Cons

Save money on interest

Can attract fees

Typically have easy access to the money in your account

Usually need a substantial amount of money in the account to make the savings worthwhile

Can benefit you tax-wise as the savings in interest aren’t considered taxable income

Not usually available on fixed rate home loans

5. How much money can you save with an offset account?

The amount of money you can save with an offset account will totally depend on your home loan balance, your offset account balance and your interest rate.

Usually, the more in your offset account, the more you’ll save.

Try using our offset calculator to get an idea of how much money you could save with an offset account.

6. Can you have an offset account on a fixed loan?

Some fixed interest rate home loans offer offset accounts. However, offset accounts are usually only available on variable interest rate home loans.

7. How long does it take to pay off your mortgage with an offset account?

The amount of time it takes to pay off your home loan with an offset account can vary depending on your offset balance, home loan balance and interest rate.

If you use the money you save in interest from using an offset account and put it towards your home loan, you could pay off your home loan early.

Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.

# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.

Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 25 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.

*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.

IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria. Top rates include lenders who are on our panel and are then defined by the circumstances provided by the borrower.

The Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.

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