Mortgage offset and redraw calculator
Every dollar sitting in an offset account, or paid into the loan as an extra repayment, is a dollar you don't pay interest on. Enter your loan and your extra money to see how much interest that saves, and how much sooner the loan is paid off.
What you owe on the loan itself.
Optional — what the balance grows by.
Interest saved
$288,440
over the life of the loan
Paid off sooner by
5 years 11 months
Done in 22 years 1 month instead of 28 years
Scheduled repayment
$4,039.39
a month, principal and interest
Interest without offset
$707,235
Interest with offset
$418,795
Assumes a 100% offset, a rate that doesn't change, and repayments at the amount scheduled for your balance, rate and years left. Interest is worked out monthly; lenders charge it daily, so real figures differ slightly.
Why a small offset makes a big difference
Your repayment stays the same, but with less interest charged each month, more of every repayment goes on the loan itself. That smaller balance attracts less interest the next month, and so on — the saving compounds over decades. It's why a balance that looks modest today can take years off a 30-year loan, especially if you keep adding to it.
Have redraw instead of an offset?
The saving works the same way. Extra repayments come off the balance interest is charged on, just like money in an offset, so the calculator handles both — pick “Redraw” and enter the balance and redraw your bank shows.
The differences are about access, not interest:
- Money in an offset is in an everyday account; redraw has to be taken back out of the loan first.
- Some lenders limit redraw, charge for it, or reduce what's available if you change the loan.
- If the property is, or later becomes, an investment, money redrawn for other purposes can change how much of the interest is tax-deductible. That's worth checking with a tax adviser before relying on redraw.
Offset accounts for couples
Couples often run the offset as their shared account: both pays land there, bills come out of it, and the balance does double duty as savings. It works well, but it raises questions a calculator can't answer:
- Who has put in what — and does that matter to you both?
- If one of you saved more before buying, is that still “yours”?
- How much of the balance is spoken for by upcoming bills?
Duet connects your home loan and offset (read-only), tracks what each of you contributes, and records whose money was in the offset or redraw to begin with, so the savings stay visible and fair.
Common questions
How does a mortgage offset account work?
An offset is a transaction or savings account linked to your home loan. Each day, the lender takes its balance off your loan balance before working out interest. With $600,000 owing and $40,000 in the offset, you're charged interest on $560,000 — while the $40,000 stays yours to spend.
Does an offset lower my repayments?
Usually not. Your repayment normally stays the same, but because less of it goes on interest, more goes on paying down the loan. That's why the loan finishes early — the calculator shows how much sooner.
Is money in an offset better than savings interest?
Each dollar in a full offset saves interest at your home loan rate. Interest you avoid paying isn't income, so it isn't taxed the way savings account interest is. Whether that suits you depends on your circumstances — rates, fees and how you use the money all matter.
What's the difference between an offset and redraw?
Both reduce the interest you pay. Money in an offset sits in a separate account you can use day to day. Extra repayments with redraw go into the loan itself; you can take them back out, but lenders can set limits, fees or minimums, and may reduce the redraw available.
Do extra repayments save as much as an offset?
Dollar for dollar, yes — as long as the money stays put and your repayment stays the same. $40,000 sitting in redraw saves the same interest as $40,000 in a full offset. Choose “Redraw” above to work it out from the balance your bank shows.
Why does the calculator ask for the balance my bank shows?
Banks take extra repayments off the loan balance they show you, and list the redraw separately. So $560,000 owing with $40,000 available to redraw is really a $600,000 loan with $40,000 working against it. The calculator adds them back together so the saving isn't counted twice.
What if my offset is only partial?
Some loans offset only a portion of the balance (say 40%). This calculator assumes a full 100% offset, so a partial offset would save less than shown.
We both put money in the offset. Whose money is it?
Legally that depends on whose name the account is in and what you've agreed. Practically, couples often lose track of who contributed what — which matters if you split up, or when one of you has saved more. Duet records who put money into a shared offset, so the answer isn't left to memory.
See an offset working in a real household
Explore Duet with a demo couple: their mortgage, their offset and what each of them has put in. No sign-up needed.
General information only. Duet Money isn't a licensed financial adviser — these figures are arithmetic on the numbers you enter and don't take your personal circumstances into account. Consider speaking to a licensed adviser before making decisions about loans, tax or investments.