Mortgage Offset Calculator

What is a Mortgage Offset Account?

A mortgage offset account is a savings or transaction account linked to your home loan. The balance in this account is offset daily against your mortgage principal, effectively reducing the amount of interest you pay on your loan.

For example, if you have a $300,000 mortgage and $50,000 in your offset account, you’ll only pay interest on $250,000 of your loan balance.

How Does a Mortgage Offset Calculator Work?

Our mortgage offset calculator helps you determine:

1. How much interest you can save over the life of your loan
2. How much faster you can pay off your mortgage
3. The impact of different offset account balances on your loan

To use the calculator, you’ll need to input:

• Your loan amount
• Interest rate
• Loan term
• Current offset account balance
• Any additional contributions you plan to make

Benefits of Using an Offset Account

1. Reduced Interest Payments

By offsetting your savings against your mortgage, you can significantly reduce the interest charged on your loan.

2. Flexibility

Unlike making extra repayments directly to your mortgage, funds in an offset account remain accessible for other purposes.

3. Potential Tax Benefits

Interest earned on savings accounts is typically taxable, but the interest you save through an offset account isn’t considered income.

4. Faster Loan Repayment

By reducing the interest charged, more of your regular repayments go towards paying down the principal, potentially shortening your loan term.

How to Maximize Your Offset Account Benefits

1. Use it as your main transaction account
2. Have your salary deposited directly into the offset account
3. Keep your bills and credit card payments in the offset account until they’re due
4. Consider placing any lump sum payments or windfalls into the account

Understanding the Calculations

Our mortgage offset calculator uses the following formula to determine your savings:

Interest Saved = (Loan Amount - Offset Balance) * (Interest Rate / 365) * Days in Year

This calculation is performed daily, as most lenders calculate interest daily and charge it monthly.

By using our mortgage offset calculator, you can make informed decisions about your home loan strategy and potentially save thousands in interest over the life of your loan. Why not give it a try now and see how much you could save?

Ready to optimize your mortgage? Use our Mortgage Offset Calculator today and take the first step towards significant savings on your home loan!

Frequently Asked Questions

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