Does a partial offset account work the same way?

Partial offsets only reduce the interest-bearing balance by a percentage of your deposit. The calculator models a 100% offset; if your product is partial, scale the offset balance input accordingly.

Is money in offset still mine to spend?

Yes. A genuine offset account is a normal transaction account linked to your loan — you can withdraw at any time. The saving stops for whatever you withdraw, but nothing is locked away.

Why compare against after-tax savings interest?

HISA interest is taxed as income at your marginal rate. Offset savings are not income — they are interest you were never charged — so comparing the offset to the gross HISA rate overstates the savings account.

Offset calculator

See what your offset balance is really worth

Enter your loan balance, rate, and remaining term alongside the cash you could park in a 100% offset account. Compare tax-free interest savings against the after-tax return of a high-interest savings account.

Interactive mortgage offset calculator

See how much interest and time a 100% offset account saves on your Australian home loan — and whether it beats parking the same cash in a high-interest savings account after tax.

Your loan & savings

Loan balance (AUD)

Loan rate (% p.a.)

Years remaining

Offset / savings balance (AUD)

Cash parked in a 100% offset account (emergency fund, sinking funds, savings).

Alternative: high-interest savings

HISA rate (% p.a.)

Marginal tax + Medicare (%)

Offset outcomeRepayment ≈ $4,148/mo

$118,759 interest saved

Loan repaid 2 yrs 4 mo sooner (272 vs 300 months).

Without offset

$594,495

Total interest over 25 years (300 repayments of $4,148).

With $40,000 offset

$475,736

Total interest over 23 years — interest is only charged on the balance above your offset.

Offset vs high-interest savings account

Offset effective return

5.90% tax-free

HISA after-tax return

3.06%

Offset advantage (year 1)

$1,136/yr

Savings interest is taxed at your marginal rate; offset savings are untaxed because they reduce deductible-from-nothing personal loan interest. Keep in mind offset money stays redraw-accessible — it is not locked in the loan.

Estimates only — excludes fees, rate changes, and redraw rules.

Full amortization simulation with and without offset

Years-and-months saved plus total interest difference

After-tax comparison against a HISA at your marginal rate

Why offset savings are effectively tax-free

Interest earned in a high-interest savings account is assessable income taxed at your marginal rate (including the Medicare levy), so a 4.5% HISA on a 32% marginal rate only nets about 3.06%. Money in a 100% offset account earns nothing directly — instead it stops your lender charging interest on that slice of your loan, which is a guaranteed return equal to your mortgage rate with no tax withheld. When your loan rate exceeds the after-tax HISA rate, offset wins on every dollar.

The compounding effect of paying principal sooner

Every dollar of interest not charged flows straight into principal reduction, which shrinks the interest base for the following month. A persistent offset balance therefore does more than save a flat percentage each year — it shortens the loan by months or years. The calculator simulates the full month-by-month amortization schedule both ways so you can see the real payoff date difference, not just a first-year estimate.

Keep the emergency fund accessible, not redrawn

Unlike extra repayments locked into a loan (subject to redraw rules and minimums), cash in a genuine 100% offset account stays instantly accessible for emergencies, sinking funds, and opportunities. That makes offset the natural home for an emergency buffer while you have a variable-rate mortgage — you get liquidity and the tax-free saving at the same time.

Frequently asked questions

Does a partial offset account work the same way?: Partial offsets only reduce the interest-bearing balance by a percentage of your deposit. The calculator models a 100% offset; if your product is partial, scale the offset balance input accordingly.
Is money in offset still mine to spend?: Yes. A genuine offset account is a normal transaction account linked to your loan — you can withdraw at any time. The saving stops for whatever you withdraw, but nothing is locked away.
Why compare against after-tax savings interest?: HISA interest is taxed as income at your marginal rate. Offset savings are not income — they are interest you were never charged — so comparing the offset to the gross HISA rate overstates the savings account.

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