Which saves more: offset or extra repayments?

For the same dollar amount, the interest saving is similar. Offset gives you access to the money; extra repayments may be locked in (unless you have redraw).

When should I pay a lump sum?

Earlier is better — you save interest from that point. But don't sacrifice your emergency fund.

What's the difference between an offset account and redraw?

An offset is a separate transaction account linked to your loan; the balance offsets the loan balance for interest purposes but stays fully accessible like a normal bank account. Redraw lets you take back extra repayments you've already made, but access can be slower, sometimes restricted, and occasionally fee-charged, since the money has actually gone into the loan rather than sitting alongside it.

Can I combine extra repayments, offset and a lump sum?

Yes — most people do. A common approach is keeping an emergency buffer in an offset account for flexibility, making extra repayments from ongoing surplus income, and applying any windfalls (bonus, tax refund) as lump sums as they arrive.

Do extra repayments always reduce my loan term, or just the interest?

Both, on most variable loans — the extra amount reduces principal immediately, so unless you specifically request otherwise your minimum required repayment stays the same and the loan simply finishes earlier. Some lenders let you 'recalculate' repayments down instead, which keeps the original term but reduces the interest saving.

Are there fees or limits on extra repayments?

It depends on the loan. Most variable-rate loans allow unlimited extra repayments, but fixed-rate loans commonly cap additional repayments (often around $10,000-$30,000 a year) and can charge a break fee if you exceed the cap or pay off the loan early — check your loan contract before assuming the same flexibility.

Mortgage Strategy Optimiser

Compare extra repayments, offset and lump sums side by side

See how different strategies reduce your total interest and loan term. Add extra repayments, an offset balance or a lump sum to compare.

Loan & Strategies

Enter your loan details and optional strategies to compare

Loan amount ($)

Interest rate (%)

Term (years)

Repayment frequency

Optional strategies

Extra repayment per period ($)

Offset balance ($)

Lump sum ($)

In year

Strategy comparison

No extra repayments

Repayment$3,095 / month

Total interest$614,151

Term30.0 years

Extra $500/month

Repayment$3,595 / month

Total interest$399,431

Term20.9 years

Interest saved$214,720

Offset $50,000

Repayment$3,095 / month

Total interest$401,827

Term24.3 years

Interest saved$212,324

Lump sum $10,000 in year 2

Repayment$3,095 / month

Total interest$568,604

Term28.6 years

Interest saved$45,547

Official sources

Extra repayment, offset and redraw rules vary by lender and loan type — always confirm the specific terms and any fees or caps with your loan provider.

How to Use This Calculator

1Enter your loan amount, rate and term
2Add extra repayments, offset balance or a lump sum to compare strategies
3See total interest and years saved for each strategy

What is a mortgage strategy?

Your repayment strategy affects how much interest you pay. Making extra repayments, using an offset account or paying a lump sum all reduce the balance faster, so you pay less interest and may pay off the loan sooner.

This tool compares these strategies side by side so you can see which saves the most, in dollars of interest and in years off the loan term, for your actual loan size, rate and term rather than a generic example.

All three strategies work the same way mechanically — they reduce the principal your interest is calculated on, sooner than the standard schedule would — the differences between them come down to flexibility and access to the money, not the underlying maths.

Which strategy saves most?

Extra repayments: Regular extra payments reduce principal and compound over time. Even small amounts help.
Offset: An offset reduces the balance you're charged interest on. Flexible — you can withdraw if needed.
Lump sum: A one-off payment (e.g. tax refund, bonus) reduces the balance and saves interest from that point.
Interest rate type: These strategies apply most cleanly to variable-rate loans. Fixed-rate loans often cap or charge break fees on extra repayments — check your loan's terms before assuming the same saving.

Things to consider

•Combine strategies: use offset for flexibility and make extra repayments when you can.
•Check if your loan has redraw — similar to offset but less flexible.
•Some loans charge fees for extra repayments; factor that in.

Frequently Asked Questions

Official Sources

Estimates only. Not financial or tax advice. Full disclaimer for your rights and our limitations of liability.

About this calculator

This calculator exists to show you the arithmetic. It applies published Australian rates, thresholds and formulas to the numbers you enter and shows the working, so you can check it. That is all it does — it produces a number and describes what the number is. It does not recommend anything and it holds no opinion about any financial product.

What can move this result

It only knows the figures you type in. Offsets, deductions, prior-year losses, other income, your partner's position and anything you have not entered are not in the result, and any of them can move it a long way.
Rates and thresholds change, sometimes mid-year and occasionally with retrospective effect. Each calculator shows the financial year and the verification date it is working from — outside that year the result is wrong rather than approximate.
Assumptions are set to a reasonable default and every non-statutory one can be changed. Defaults are not predictions, and a small change to a growth or inflation assumption compounds into a large change in a long projection.
Where a result reaches two or more years into the future it is shown in today's dollars as well as future dollars, because a future-dollar figure overstates what the money will actually buy.
It is a generic calculator. It is not built around any particular product, it does not compare the market, and it cannot tell you whether a product is suitable for you.

Why these default assumptions are reasonable

Interest rate — 6.3% a year. The RBA's published average variable rate on outstanding owner-occupier loans (table F6, June 2026). Every strategy on the page is compared at the same rate, so the default's job is to be representative rather than sharp — and your own rate, once entered, changes every strategy identically. Source · You can change this input.

This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product. Before you make a financial decision, consider obtaining advice from someone who holds an Australian Financial Services Licence. We do not, and we cannot advise you.

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Offset Account Calculator

Interest saved with offset

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Strategy comparison

No extra repayments

Repayment$3,095 / month

Total interest$614,151

Term30.0 years

Extra $500/month

Repayment$3,595 / month

Total interest$399,431

Term20.9 years

Interest saved$214,720

Offset $50,000

Repayment$3,095 / month

Total interest$401,827

Term24.3 years

Interest saved$212,324

Lump sum $10,000 in year 2

Repayment$3,095 / month

Total interest$568,604

Term28.6 years

Interest saved$45,547

About this calculator

What can move this result

It only knows the figures you type in. Offsets, deductions, prior-year losses, other income, your partner's position and anything you have not entered are not in the result, and any of them can move it a long way.
Rates and thresholds change, sometimes mid-year and occasionally with retrospective effect. Each calculator shows the financial year and the verification date it is working from — outside that year the result is wrong rather than approximate.
Assumptions are set to a reasonable default and every non-statutory one can be changed. Defaults are not predictions, and a small change to a growth or inflation assumption compounds into a large change in a long projection.
Where a result reaches two or more years into the future it is shown in today's dollars as well as future dollars, because a future-dollar figure overstates what the money will actually buy.
It is a generic calculator. It is not built around any particular product, it does not compare the market, and it cannot tell you whether a product is suitable for you.

Why these default assumptions are reasonable

Interest rate — 6.3% a year. The RBA's published average variable rate on outstanding owner-occupier loans (table F6, June 2026). Every strategy on the page is compared at the same rate, so the default's job is to be representative rather than sharp — and your own rate, once entered, changes every strategy identically. Source · You can change this input.