The offset account: brilliant tool, or expensive habit?
Banks push offset packages hard — and charge for them, through a higher rate and often an annual fee. Whether the offset actually pays for itself depends on one thing: how much money sits in it. This calculator finds your break-even.
How much more the offset product's rate is. 0.10–0.30% is typical.
Savings interest is taxed at your marginal rate. Offset "interest saved" isn't taxed at all — that asymmetry is the offset's secret weapon.
Break-even is the balance you'd need to keep in the offset, on average, just to cover the rate premium and fee. Below it, the basic loan wins.
Who's ahead, year by year
Both loans' running cost (interest and fees, less what your savings earn). The gap between the lines is the verdict — green means the offset is winning, red means you're paying for a feature that isn't paying you back.
Total cost over the loan, side by side
Assumptions behind this calculator
- Net cost = loan interest + fees, minus after-tax interest earned on savings. Rates stay constant; savings grow by your monthly amount in both scenarios.
- The offset product's higher rate means a higher minimum repayment — to keep the comparison fair, the basic-loan borrower banks that cash difference each month too. Both scenarios spend the same money.
- The "redraw" comparison pays your savings into the basic loan as extra repayments — mathematically this matches an offset's interest saving at the lower basic rate, which is why the offset rarely wins on pure numbers there. What the offset buys instead: instant access to your money, no lender discretion over redraw, and — if this home might become an investment property later — preserved tax deductibility of the loan. That last one can be worth more than everything else on this page; it's a conversation worth having.
- Savings account interest is taxed at your selected marginal rate (including Medicare levy); offset benefits are untaxed.
- Some lenders offer offset at little or no premium — which changes this answer entirely, and is exactly the kind of thing a broker goes looking for.
A calculator gives you a number. I give you a plan.
These tools use one set of assumptions. Lenders use forty different ones — and matching your situation to the right credit policy is usually worth far more than any online estimate. Twenty minutes, no cost, no obligation.
Things to know: these calculators are a guide only. Results are estimates based on the figures you enter and the assumptions stated on this page — they don't take into account all fees and charges, changes in interest rates, or your full personal circumstances, and they are not a loan offer, pre-approval, or credit advice. Every lender assesses applications differently, and your actual borrowing capacity, repayments and savings may be higher or lower. Before acting, consider whether the results are right for your situation — or better yet, talk it through with a broker. Wombat Home Loans is a Credit Representative of Loans Only Pty Ltd, Australian Credit Licence 561324.