Enter your loan and what you'd keep in the offset. You'll see the interest saved and how much sooner the loan is paid off, a full offset against a partial one, and whether the yearly package fee is worth paying.
Balance that covers the fee—
Full against partial
Full
Partial
What the calculator follows
The rule is the one Moneysmart describes: each day the lender takes the offset balance off the loan balance before working out interest (Moneysmart, offset accounts). The repayment stays at the scheduled figure, so the interest you aren’t charged comes off the principal and the loan finishes early. A partial offset counts only its percentage of the balance. The balance that covers the fee is the fee divided by your rate, and by the partial percentage where there is one: the amount whose first year of interest saving pays for the package.
The simplifications, so you can discount them. Interest is worked monthly on each month’s opening balance, where lenders calculate daily and charge monthly. Money goes into the offset at the start of each month and never comes out. The rate never changes, because nothing here guesses where rates go. The package fee is charged to the loan at the start of each year, as many lenders do, so it compounds at your rate the same way the saving does; counting it as flat dollars would flatter the offset.
Where the answer usually turns
The saving is only as good as the balance you actually keep there. A fee that looks cheap against a $50,000 offset looks different against the $8,000 left after a renovation, and some loans without an offset are priced lower to begin with. Our guide to offset accounts covers offset against redraw, including the tax trap if the home later becomes an investment, and why a split loan with a smaller offset can beat a full one. The repayment calculator shows the repayment itself. This page is general information, not advice.
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Not on most loans. The repayment stays where it was set, and the interest you're not charged goes off the principal instead, which is why the loan finishes early. Ask your lender how it treats yours; this calculator assumes the repayment is fixed at the scheduled figure.
What's the difference between an offset and redraw?
Money in an offset is still yours, sitting in a transaction account, and you take it out like any other savings. Money paid into redraw has repaid the loan, and taking it back out is drawing on the loan again. The interest saving is similar. The difference shows up in who can reach the money and, if the home later becomes an investment, in the tax treatment. Our guide covers that.
Why does a partial offset save so much less?
Because only part of the balance counts. With a 40% offset, $50,000 saved offsets interest on $20,000 of the loan. Partial offsets tend to come on cheaper loans, so the comparison that matters is the rate gap against the interest the missing 60% would have saved.
Is the break-even balance a figure I need to keep there all year?
Roughly, yes. It's the average balance whose first-year saving equals the fee, worked at your rate. A balance that starts high and gets spent down on a renovation won't hold the average up.
Can I have an offset on a fixed rate loan?
Some lenders allow it, often with a cap on how much is offset, and many don't. That's one reason people split a loan, with the offset sitting on the variable part.