Offset savings example calculation
Let's say you are 3 years into a 30-year, $500,000 home loan with a 100% offset account, which you haven't yet added any savings to. You have built up some money in a seperate savings account, earning less than 1% interest, and you want to see if an offset account will help you.
You enter your loan details into the offset calculator:
- Loan amount: $500,000
- Loan term: 30 years
- Interest rate: 2.80%
- Offset (savings) amount: $25,000
- Start offset at year: 3
- Results: You will repay your home loan 13 months early and save $26,711 in interest
The $25,000 savings results in you paying $26,711 less in interest. Instead of paying this in interest, this money will go towards your loan principal. If you add more money to the offset account over time, this saving will increase.
If you want to offset your loan, how can you work out the amount you will pay..?
Hi Kere,
Thank you for reaching out to Finder.
If you’re considering an offset mortgage, use an offset mortgage calculator to see if you this might be a viable option for you once you have all the variables in hand. You would need the following information to estimate this:
Loan amount. The loan amount refers to the amount of money you have borrowed or plan to borrow.
Loan term. The loan term is the amount of time you have to repay the loan.
Interest rate. The interest rate is the annual percent at which you repay the loan, which can be fixed or variable.
Repayment frequency. The repayment frequency is the interval in which you make your repayments and is generally monthly, fortnightly or weekly.
Offset account information. The offset account balance is the amount you have in your offset account while the ‘start after’ date is the time that has elapsed on the loan before the offset account is used.
If you’d like more professional advice regarding this matter you can compare mortgage brokers in your area and get in touch with one for help today. Hope this helps!
Cheers,
Reggie