How the Offset Account Calculator Works (With a Worked Example)
Calculates interest and time saved by keeping money in an offset account. This guide walks through what each input means, the formula behind the answer and a worked example using typical Australian figures. You can follow along in the free Offset Account Calculator.
Why it matters
Buying property in Australia involves a deposit, stamp duty, lender requirements such as the APRA serviceability buffer, and ongoing repayments that move with interest rates. Investors also weigh rental yield, negative gearing and capital gains tax.
What you need to enter
The calculator asks for 4 inputs. The table shows each one with the example value used later in this guide.
| Input | Example value |
|---|---|
| Loan amount ($) | 500000 |
| Offset balance ($) | 50000 |
| Interest rate (%) | 6 |
| Loan term (years) | 30 |
The formula
Interest is charged on (loan balance − offset balance) each month while repayments stay the same.
Worked example
Entering the example values above gives these results:
| Result | Value |
|---|---|
| Interest saved | $194,606.16 |
| Time saved | 5 yrs 4 mths |
| Interest saved in year one (approx.) | $3,000.00 |
The headline figure is $194,606.16 (interest saved). Change any input in the calculator and every result updates instantly, so you can test different scenarios side by side.
How the interest saved changes with loan amount
The table below keeps every other input at the example value and moves only “Loan amount ($)” up and down by 10% and 20%. It shows how sensitive the interest saved is to that one figure.
| Loan amount ($) | Interest saved |
|---|---|
| 400,000 | $184,283.86 |
| 450,000 | $189,877.51 |
| 500,000 | $194,606.16 |
| 550,000 | $198,659.90 |
| 600,000 | $202,175.26 |
At 400,000 the result is $184,283.86; at 600,000 it is $202,175.26. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.
A practical tip
Offset savings are effectively tax-free, because you save interest rather than earn taxable interest.
Keep going
Before relying on the number, read Getting the Most From a Offset Account Calculator: Tips and Common Errors. You might also find these guides useful:
- Rental Yield Calculator: Formula, Example and What the Result Means
- Using a Negative Gearing Calculator in Australia: A Step-by-Step Guide
- Capital Gains Tax Calculator Explained for Australians
Frequently asked questions
- Do these calculators match what my bank will say?
- Lenders use their own models, expense benchmarks and policies. Use these results to prepare, then speak to a lender or broker.
- Are stamp duty rates current?
- Duty thresholds are indexed or changed regularly. Always confirm with your state revenue office before relying on a figure.
- Is this financial advice?
- No. The calculators give general estimates only and don’t consider your objectives or financial situation.
Run your own numbers in the Offset Account Calculator.
Open the calculatorGeneral information only. Rates and thresholds change, usually on 1 July. Confirm current figures with the ATO or the relevant authority, and get personal advice for decisions about your situation.