What the break-even balance tells you
An offset can reduce the balance used to calculate home-loan interest. But the account only puts you ahead if that saving covers any difference in loan rates and every extra fee. The break-even balance is the average amount you need to hold in the offset for those annual costs to be equal.
How the calculator works
[Loan × (offset rate − no-offset rate) + annualised fees] ÷ offset rateFor your entered balance, the annual net benefit is calculated directly:
No-offset interest − (offset-loan interest after offset + fees)If the first formula produces a negative number, break-even is shown as $0. If it exceeds the loan balance, there is no reachable balance because interest savings are capped at the loan.
A $600,000 home loan
- Average offset
- $50,000
- Offset / no-offset rates
- 6.10% / 5.95%
- Annual fees
- $395
- No-offset annual interest
- $35,700
- Offset interest + fees
- $33,945
The offset option is ahead by $1,755 a year. It breaks even at an average offset balance of about $21,230.
Assumptions
- Loan and offset amounts are average balances held constant for one year.
- Interest is estimated using the entered annual rates; daily timing and compounding differences are not modelled.
- The no-offset loan is assumed to be genuinely comparable apart from its rate, fees and offset feature.
- Only the offset option’s annual and monthly fees are included. Add any comparable-loan fees to the rate comparison yourself.
- Results exclude repayment schedules, future rate changes, tax, deductibility, redraw rules and lender conditions.
Offset account calculator FAQs
What balance should I enter for my offset account?
Use the average balance you expect to keep there across the year. A payday peak will overstate the saving if the money is normally spent during the month.
Why compare two home-loan rates?
An offset feature can come with a different rate from a comparable basic loan. Ignoring that difference can make an offset look better than it is, so this calculator prices both loans separately.
What if my offset balance is higher than my loan?
The calculation caps the useful balance at the outstanding loan. Once the loan is fully offset, additional cash cannot reduce its interest below zero.
Does this compare offset and redraw?
No. It compares the annual cost of a loan with an offset against a loan without one. Access, repayment treatment and other features depend on the lender and loan terms.
Does the result include repayments or tax?
No. It is a one-year estimate using average balances. It does not model repayment timing, changing rates, tax, deductibility or personal circumstances.