Offset mortgage calculator
How much interest an offset facility would save you, how much sooner you'd be mortgage free, and what interest rate you're effectively paying once your savings are taken into account.
Enter your details in the purple cells. Yours to keep and change.
How an offset mortgage works
An offset mortgage links your savings and everyday accounts to your home loan, then deducts those balances before charging interest.
So if you have a $100,000 floating offset mortgage and $60,000 across your linked accounts, you pay interest on $40,000 — not the full $100,000. The savings stay yours, available whenever you want them. They're just working against the loan while they sit there.
That's the appeal: it turns idle cash into interest saved, without locking it away.
The catch nobody mentions first
Three things worth understanding before you set one up.
Offset loans are floating. You pay the floating rate on whatever isn't offset, and floating is usually higher than what you could fix at. So if you're offsetting $60,000 against a $300,000 loan, you're paying a premium on the other $240,000 for the privilege. The maths only works if your offset balance is large enough relative to the loan.
Your savings stop earning interest. You can't double dip — money offsetting a mortgage isn't also earning a return in a savings account. In practice this is usually still worth it, because the mortgage rate you're avoiding is higher than the savings rate you're giving up, and the mortgage saving isn't taxed. But it's a real trade, not a free win.
There's always an opportunity cost. If the money you're offsetting is your emergency fund, or cash that was going to sit in savings regardless, then an offset facility is a straightforward improvement. If instead that money could be invested, you're choosing a guaranteed saving at your mortgage rate over an uncertain return somewhere else. That might be the right call — it's just worth making it deliberately rather than by default.
For your short term goals, parking your money in cash is often the right call.
What the calculator shows you
Because you'd probably be fixed at a lower rate if you weren't using an offset, the calculator doesn't just show your savings in isolation. It also shows what you'd have saved by fixing at a lower rate instead — so you're comparing against the realistic alternative rather than against doing nothing.
You'll see the interest saved, the time taken off the loan, and the effective rate you're paying once your offset balance is deducted.
Using the spreadsheet
Enter your details in the purple cells, then:
Column E — regular monthly or lump sum contributions to your offset accounts. To model spending or withdrawing savings, enter a negative number.
Column I — actual payments towards reducing the mortgage, as opposed to offsetting against it.
Column K — what you're paying in mortgage interest each month once your offset savings have been deducted.
Two things the calculator can't know
Some banks charge fees to set up or maintain an offset facility, which eat into the saving. Worth asking before you commit.
And the rate is floating, so it moves. A calculation done today assumes a rate that will change, probably several times, over the life of the loan.
Offset or revolving credit?
Both aim at the same thing — using your cash to reduce mortgage interest — but they work differently. An offset keeps your savings separate and simply nets them off. A revolving credit puts your income and spending through the loan itself, so the balance moves constantly.
Offset suits people with a decent lump sum sitting still. Revolving credit suits people with a consistent gap between income and spending, and the discipline to manage it.
Revolving credit mortgage calculator
Worth a second opinion?
Deciding how much to put on an offset, and how much to fix, is exactly the sort of thing worth talking through — get it wrong in either direction and it costs you.
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