How does an offset account work?

An offset is a separate account linked to an eligible home loan. With a 100% offset, each dollar in the account reduces the balance used to calculate interest by one dollar. The account must be linked correctly, and the loan’s terms determine which balances qualify.

Withdraw $10,000 from that offset and, all else unchanged, the interest-bearing balance becomes $460,000. Put the money back and it returns to $450,000.

Using a hypothetical 6% annual rate and a 365-day calculation:

That is the difference in interest for a day when the offset stays at $50,000 and the loan remains above that amount. Across 30 identical days, the difference is about $246.58. These figures exclude fees and assume the same loan rate with and without the offset.

This is a snapshot calculation, not a forecast of lifetime savings. Tomorrow’s loan balance, offset balance or rate may be different.

On a principal-and-interest loan, an offset generally changes the split within a repayment: less interest, more principal. It does not automatically lower the scheduled repayment. Our repayment guide walks through that split with numbers.

That also explains why a large offset balance can feel invisible in a bank statement if you only look at the amount debited each month. The interest charge and remaining loan balance tell another part of the story.

Partial offsets, package fees, account charges and different loan rates can change the result. Money beyond the amount owing cannot reduce this loan’s interest below zero. Whether an offset account is available, and how you can access its money, depends on the product.

Sidelo models a 100% offset with no product fees. It does not compare lenders or decide whether an offset product suits you.

In the calculator, enter the loan balance and offset balance separately. Keep “monthly savings” for money available after expenses and repayments; counting the same money twice makes the projection too optimistic.