Offset Account Fee Break-Even Calculator
Compare an offset loan with an annual fee against a basic loan plus a savings account, and find the offset balance at which the fee pays for itself.
Last verified: 12 September 2026Reviewed by the Savings Mate editorial team — figures fact-checked against the ATO, Services Australia and ASIC MoneySmart.
Is my offset account worth the annual fee?
On a $500,000 loan with a $395 annual fee and a 0.15 percentage point rate premium, you need about $37,664 in the offset before it beats a basic loan plus a 4.50% savings account taxed at 32%. Below that balance the fee and premium cost more than the extra interest the offset saves; above it, every additional dollar in the offset is ahead. Estimate only.
How this is calculated
Month-by-month model. Both loans are amortised over the same remaining term, so each has its own scheduled repayment. The offset loan is charged interest on the balance less the offset (the effective offset is always capped at the loan balance), with the offset balance moving by your monthly change. The annual fee is counted at the end of each loan year as a cost, not added to the loan. The basic loan is charged interest on the full balance, and the same cash sits in a savings account earning your rate less tax at your marginal rate, with the after-tax interest left to compound.
Net cost and verdict. Net cost of the offset loan = interest paid + fees + any set-up cost. Net cost of the basic loan = interest paid − after-tax savings interest. The offset wins when its net cost is lower.
Break-even balance. (annual fee + rate premium × loan balance) ÷ (offset loan rate − savings rate × (1 − marginal tax rate)). It holds the balance constant for a year, so it is a rule of thumb; if the savings rate after tax is at or above the offset rate there is no break-even and the savings account wins at any balance.
Assumptions. Rates are fixed for the horizon. Repayments are monthly and unchanged. Redraw, partial offsets and monthly account fees are not modelled. The 32% default marginal rate is the 30% bracket for taxable income of $45,001 to $135,000 in 2026-27 plus the 2% Medicare levy.
Sources. ASIC MoneySmart — Mortgage offset accounts (checked 12 Sep 2026); ATO — Tax rates, Australian resident (checked 12 Sep 2026); ATO — Medicare levy (checked 12 Sep 2026).
What to do next. If the basic loan wins at your balance, read when an offset account fee outweighs the interest saved for the questions to put to your lender, then run the offset calculator to see the whole-of-loan saving from the balance you actually keep, and the refinance calculator if a basic loan at a lower rate is on the table.
General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.
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