One scenario for repayments, offset and overpayments
Australian borrowers often need to combine three questions: what is the contractual repayment, how much does money in an offset account save, and what changes if an extra amount is paid into the loan each month. This calculator keeps those inputs together so the comparison reflects their combined effect.
The baseline uses the same loan amount, rate and term without offset or extra repayments. The scenario charges less interest when the offset balance is positive and applies any extra payment after the month's interest.
Repayment formula
For principal P, monthly rate r and n payments, the contractual payment is:
M = P × r(1+r)n ÷ ((1+r)n − 1)
At 0%, the payment is principal divided by the number of months. During simulation, interest is calculated on the greater of loan balance minus offset or zero. The offset itself is not transferred into the loan.
How the growing-offset input works
The current offset is used for month one. The monthly increase is added after each month's loan calculation, representing a steady net saving into the account. Real balances move with salary, bills and withdrawals, so a single steady amount is a scenario rather than a forecast.
A dollar in offset can save mortgage interest while remaining accessible, but an offset loan or package may have a higher rate or annual fee. Those costs are not automatically included; compare them with the calculated saving.
Monthly model versus daily lender calculations
ASIC Moneysmart explains that interest on most home loans is calculated daily. This site intentionally uses a monthly model so assumptions remain inspectable and can be tested against the standard amortisation formula. It will not reproduce the exact cent amount on a lender statement.
Variable-rate changes, split loans, interest-only periods, redraw, package fees, missed repayments and lender-specific timing are outside scope. The default is the RBA average for new owner-occupier principal-and-interest housing loans in May 2026; replace it with the rate relevant to the loan or quote being considered.
Worked example
For an A$800,000 property with an A$160,000 deposit, the loan is A$640,000. At 6.15% over 30 years, the contractual payment is A$3,899.06 a month. With no offset, estimated interest is A$763,661.68 over 360 months. Starting with A$30,000 in offset and adding A$500 a month reduces the monthly-model interest to A$457,226.65 and the payoff time to 282 months: A$306,435.03 less interest and 78 months earlier.
Input variations
| Scenario | Contract payment | Scenario interest | Payoff | Saving vs baseline |
|---|---|---|---|---|
| No offset or extra payment | A$3,899.06 | A$763,661.68 | 360 months | A$0 |
| A$30,000 offset, growing A$500/month | A$3,899.06 | A$457,226.65 | 282 months | A$306,435.03 |
| Same offset plus A$500 extra repayment | A$3,899.06 + A$500 | A$364,154.59 | 229 months | A$399,507.09 |
Differences from a lender schedule
The lender normally calculates interest daily using actual transaction and repayment dates. Offset eligibility, whether the account is 100% or partial, package fees, a higher offset-loan rate, fixed-loan repayment limits and redraw conditions can materially change the benefit. The table is a steady monthly scenario, not a forecast of future cash balances.
Documents and costs to check
Use the loan contract or statement for principal, rate, repayment day and remaining term; the linked-account terms for the offset percentage and eligible balance; and the fee schedule for package or account costs. Compare total offset costs against modeled interest saved, and check restrictions before relying on extra repayments or redraw.
Source
The default interest rate is sourced from the RBA lenders' interest-rates table. Offset mechanics and the distinction from redraw are based on ASIC Moneysmart's mortgage offset guidance. Use the lender schedule to match contractual dates and daily interest.