Calculate your monthly repayments, see the full cost of your loan, and find out exactly how much your offset account is saving you — in real time, no signup required.
Open the full calculator with offset account modelling
Open mortgage calculator →Based on a 6.5% variable rate over 30 years — the current Australian average. Adjust for your rate in the calculator above.
| Loan amount | Monthly repayment | Total interest paid | Total repaid |
|---|---|---|---|
| $300,000 | $1,833 | $359,820 | $659,820 |
| $400,000 | $2,444 | $479,760 | $879,760 |
| $500,000 | $3,055 | $599,700 | $1,099,700 |
| $600,000 | $3,793 | $719,640 | $1,319,640 |
| $700,000 | $4,277 | $839,580 | $1,539,580 |
| $800,000 | $4,888 | $959,520 | $1,759,520 |
| $1,000,000 | $6,110 | $1,199,400 | $2,199,400 |
An offset account is one of the most powerful tools available to Australian mortgage holders — yet most people significantly underestimate its impact. The money in your offset account reduces the balance that interest is charged on, dollar for dollar. Your minimum repayment stays the same, but more of it chips away at principal.
The compounding effect over time is substantial. Here's what a consistent offset balance does to a $600,000 loan at 6.5% over 30 years:
The key insight is that your offset balance is most valuable in the early years of your loan, when the outstanding balance is highest and interest charges are at their peak. Building your offset as fast as possible in the first 5-10 years of a loan has an outsized impact on lifetime interest costs.
Australian mortgage repayments use a standard amortisation formula. Each monthly repayment covers the interest charged for that month, plus a portion of the loan principal. In the early years, most of your repayment goes to interest — this gradually shifts toward principal as the balance reduces.
The formula ensures your repayment amount stays constant (on a variable rate loan, this resets when rates change), and the loan reaches exactly zero on the final payment of the term.
When the RBA changes the cash rate, your lender adjusts your variable rate — usually within days — and your minimum repayment changes accordingly. A 0.25% rate increase on a $600,000 loan adds approximately $90 per month to repayments.
Most owner-occupier loans in Australia are principal and interest (P&I) — each repayment reduces your loan balance. Interest only (IO) repayments cover just the interest charge and are more common for investment loans, typically for periods of 1-5 years before reverting to P&I.
IO repayments are lower in the short term, but the loan balance doesn't reduce during the IO period — meaning you pay more interest over the life of the loan. APRA requires banks to assess IO loans at a higher serviceability buffer.
Repayments are calculated from your loan balance, interest rate, and remaining term using a standard amortisation formula. Each payment covers the interest charge plus a portion of principal, structured so the loan clears at the end of the term. Use the calculator above for your exact figure.
It doesn't reduce your minimum repayment — it reduces the interest charged each month. With less interest to cover, more of your fixed repayment goes to principal, paying off the loan faster and saving thousands in total interest. Your repayment amount stays the same; you just pay more principal each month.
Both achieve the same interest saving. The difference is liquidity — offset account funds stay accessible, while extra repayments are locked into the loan (unless you have a redraw facility). For most owner-occupiers on a variable rate, an offset account is preferable because it maintains flexibility without sacrificing any interest saving.
On a $600,000 loan, a 1% rate increase adds approximately $360 per month to repayments. On $400,000 it's approximately $240/month. Use the interest rate slider in the calculator to see exactly how rate changes affect your specific loan.
On a variable rate loan, your lender will adjust your rate — usually passing on the RBA change in full within days. Your new minimum repayment is then recalculated using the same term and remaining balance. Fixed rate borrowers are unaffected until their fixed period ends.
Yes — fortnightly repayments result in 26 half-payments per year, equivalent to 13 monthly payments rather than 12. This extra payment per year reduces the loan term by approximately 3-4 years on a 30-year loan and saves significant interest. Many lenders offer this option automatically.