Mortgage Offset Calculator

Repayments, total interest and offset savings against your take-home pay

Your loan details

Loan balance (principal)

$

Years remaining on your loan

Your home loan interest rate (auto-filled, editable)

%

Auto-filled with the RBA average variable rate (6.2%). Enter your own rate for an exact result.

Estimated property value (optional)

$

Based on your estimated property value, not a bank valuation.

Compare with an offset account

Your income (after any salary sacrifice)

$

Calculate your pay on the main calculator to carry it over automatically.

Enter your loan balance to see your repayment.

An offset account reduces the interest on your home loan without earning taxable interest itself. See how much that's worth compared to a taxable return.

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How this mortgage calculator works

Enter your loan balance, interest rate and loan term to see your repayment each week, fortnight, month or year. The calculator uses the standard principal and interest formula used for Australian home loans, and the results update as you type.

Add your annual salary and the calculator first works out your take-home pay using current ATO tax rates. You can then see your repayment next to what you actually earn, and how much is left over after each payment.

What is an offset account?

An offset account is an everyday bank account linked to your home loan. Money sitting in it is subtracted from your loan balance when interest is calculated, so you are only charged interest on the difference. Your repayment amount stays the same. More of each repayment goes towards the principal, which pays the loan off sooner and reduces the total interest you pay.

The calculator also shows the pre-tax return you would need from a savings account or investment to match your offset account. Interest you avoid on your home loan is not taxed, while interest you earn on savings is, so the comparison depends on your income.

Loan to value ratio and equity

If you enter an estimated property value, the calculator shows your loan to value ratio (LVR) and your equity. Lenders usually charge Lenders Mortgage Insurance when the LVR is above 80%, so this figure matters when you refinance or buy.

Open the pay calculator

Rates last checked against official sources on 15 August 2026. How we check the numbers

Frequently Asked Questions

What is a mortgage offset account?

An offset account is a savings or everyday transaction account linked to your home loan. The bank does not pay you interest on the balance. Instead, it reduces the amount you are charged interest on. If you have a $500,000 loan and $20,000 in your offset account, you only pay interest on $480,000.

What does "pre-tax equivalent return" mean?

Because offsetting reduces the interest you pay rather than paying you interest you earn, it is not taxed. To compare it fairly with a taxable investment like a term deposit, we convert your mortgage rate into what a taxable investment would need to pay you, before tax, to match it. The formula is: mortgage rate divided by (1 minus your marginal tax rate).

Do I pay tax on money in an offset account?

No. The balance does not earn interest, so there is no taxable income to declare. This is different from a regular savings account, where the interest you earn is taxed at your marginal rate.

Why doesn't this calculation include the Medicare levy or HECS/HELP?

This calculator uses your income tax bracket only. Medicare levy (2%) and HECS/HELP repayments can raise your true marginal cost further, so your real equivalent return may be slightly higher than the figure shown.

What's the difference between an offset account and a redraw facility?

Both reduce the interest you pay by using extra funds against your loan. An offset account is a separate, flexible account you can access anytime, like a bank account. A redraw facility lets you pay extra directly into the loan itself and redraw it later, but access is sometimes slower and may involve fees. Offset is usually more flexible; redraw sometimes has a marginally lower rate.

Where does the default interest rate come from?

The rate shown is the Reserve Bank of Australia's average variable rate for existing owner-occupier home loans (RBA series FLRHOOVA), updated periodically. It is a market average, so enter your own rate for an accurate result.

Is it better to put money in my offset account or invest it?

This depends on your loan rate, your marginal tax rate, and the expected return of the investment. This calculator's pre-tax equivalent return gives you one side of that comparison. In general, if an investment's realistic after-fee return is unlikely to beat your equivalent return, reducing effective interest via offset is the lower-risk option. This is general information, not personal financial advice. For a decision specific to your situation, a licensed financial adviser can help.