Mortgage Offset Calculator (USA)
See how cash parked in a linked offset or all-in-one account cuts the interest you're charged, shortens your payoff, and beats what the same money would earn after tax in a regular savings account.
| # | Date | Payment | Principal | Interest | Offset | Balance |
|---|---|---|---|---|---|---|
| Calculate to see schedule | ||||||
How to use the mortgage offset calculator
Four quick steps show what cash parked in a linked offset account is worth — the interest never charged, the years it takes off your payoff, and how it compares with leaving the same money in savings after tax.
Enter your mortgage
Balance, interest rate, and the years still left on the term.
Set your offset balance
The cash you keep linked today, plus anything you add each month.
Add the product terms
Offset effectiveness, any cap, and the annual account fee.
Compare against savings
Your savings APY and tax rate give the true net benefit, plus a PDF.
Availability note: True offset mortgages are standard in the UK and Australia but uncommon in the United States. The closest US equivalents are all-in-one mortgages and first-lien HELOCs, offered by a limited number of lenders with terms that vary widely. Use this calculator to size the potential benefit, then confirm what is actually available to you.
How offset savings are calculated
An offset account does not pay you interest — it stops interest being charged. Each month the calculator subtracts your linked balance from the loan, charges interest only on what is left, and keeps your payment fixed so the difference lands on principal. Here is the exact math.
Worked example — a 380,000 balance at 6.50% with 28 years left, offset by 40,000
Monthly P&I: ≈ 2,459
Interest, month 1, no offset: 380,000 × 6.5% ÷ 12 ≈ 2,058
Interest, month 1, with offset: 340,000 × 6.5% ÷ 12 ≈ 1,842
Difference: ≈ 217 more principal in month one alone
≈ with 40,000 offset plus 500 a month added, total interest falls from about 446,100 to about 193,500 — 252,600 saved and 8 yrs 6 mo off the term.
Mortgage offset charts
Handy lookups for the questions people ask most — what different offset balances are worth, what regular deposits add, what a partial offset costs you, and the savings rate you would need to match it. Figures use a 380,000 balance at 6.50% with 28 years remaining, a fixed P&I of about 2,459, and total interest of about 446,100 without an offset.
| Starting offset | Payoff time | Total interest | Interest saved | Time saved |
|---|---|---|---|---|
| None | 28 yrs | 446,100 | — | — |
| 0 (deposits only) | 22 yrs 2 mo | 271,600 | 174,500 | 5 yrs 10 mo |
| 20,000 | 20 yrs 8 mo | 229,400 | 216,700 | 7 yrs 4 mo |
| 40,000 | 19 yrs 6 mo | 193,500 | 252,600 | 8 yrs 6 mo |
| 60,000 | 18 yrs 5 mo | 162,800 | 283,300 | 9 yrs 7 mo |
| 100,000 | 16 yrs 9 mo | 113,600 | 332,500 | 11 yrs 3 mo |
The offset balance is never spent — it is still yours at payoff. In the 40,000 row it has grown to about 157,000 by the time the mortgage clears.
| Monthly deposit | Payoff time | Interest saved | Time saved |
|---|---|---|---|
| None | 22 yrs 9 mo | 156,900 | 5 yrs 3 mo |
| 250 | 20 yrs 9 mo | 214,900 | 7 yrs 3 mo |
| 500 | 19 yrs 6 mo | 252,600 | 8 yrs 6 mo |
| 1,000 | 17 yrs 11 mo | 299,300 | 10 yrs 1 mo |
A flat 40,000 that never grows still saves about 156,900. Deposits compound the effect because each one keeps working for every month that follows.
| Product terms | Interest saved | Time saved |
|---|---|---|
| 100% offset, no cap | ~156,900 | 5 yrs 3 mo |
| 75% offset | ~125,100 | 4 yrs 2 mo |
| 50% offset | ~89,000 | 3 yrs |
Effectiveness matters roughly in proportion, so check the real terms before assuming a full offset. A cap only bites once your linked balance grows past it — with 500 a month going in, a 50,000 cap cuts the saving from about 252,600 to about 183,200.
| Your tax rate | Equivalent pre-tax APY | Versus a 4% account |
|---|---|---|
| 0% | 6.50% | Offset wins |
| 12% | 7.39% | Offset wins |
| 22% | 8.33% | Offset wins |
| 24% | 8.55% | Offset wins |
| 32% | 9.56% | Offset wins |
| 35% | 10.00% | Offset wins |
Savings interest is taxed; interest you avoid is not. To beat a 6.50% offset, a saver in the 24% bracket needs an account paying more than 8.55% before tax.
| Savings APY forgone | Interest earned after 24% tax | Net benefit of offsetting |
|---|---|---|
| 0% | 0 | 252,600 |
| 2% | 34,200 | 218,400 |
| 4% | 81,300 | 171,300 |
| 5% | 111,200 | 141,400 |
| 6% | 146,500 | 106,100 |
Fees come off the top of this: a 300 annual fee costs about 5,700 over the term, cutting the 4% row from about 171,300 to about 165,600. A higher offset-product rate would reduce it further — see tip 4.
stays yours
subtracted first
more principal
Your cash is never handed over — it is only counted against the loan before interest is worked out, and the fixed payment then covers more principal.
- Linked, not spent — the balance stays liquid and withdrawable at any time.
- Interest charged on less — only the balance above your offset is charged.
- Term shortens — with the payment unchanged, the saving becomes extra principal.
Everything the calculator works out
One mortgage and one offset balance gives you the whole picture — what the offset saves, what it costs you in forgone savings, and what is left over.
Key figures behind offset accounts
Built for anyone holding cash against a mortgage
If you keep a meaningful balance in savings while carrying a mortgage, the same calculator prices what linking that cash would be worth.
Keeps six to twelve months of expenses in cash and wants it working without locking it away or taking market risk.
- Model your typical balance, not your peak
- Keep full access to the money
- Compare against your current APY
Self-employed or commission-paid, with large sums sitting between tax bills and quiet months — cash that offsets while it waits.
- Use your average balance, not the high
- Remember the benefit stops when you spend
- Check for withdrawal limits
Deciding between a high-yield savings account and an offset, and wants the comparison made properly after tax and fees.
- Enter your marginal tax rate
- Read the equivalent pre-tax APY
- Add the offset product’s fees
7 tips for using an offset account well
A few checks make the difference between an offset that pays for itself and one that quietly costs you.
Mortgage offset calculator FAQ
The availability, tax, product-terms, and comparison questions people ask most about offset and all-in-one mortgages.
An offset account is a savings or checking account linked to your mortgage. Instead of earning interest, the balance is subtracted from your loan before interest is charged, so a 380,000 loan with 40,000 in the offset is only charged interest on 340,000.
The money stays yours and stays liquid — you can withdraw it at any time. It simply reduces the balance you are charged interest on for every day it sits there.
True offset mortgages are common in the UK and Australia but rare in the US. The closest American equivalents are all-in-one mortgages and first-lien HELOCs, where your checking deposits sit against the loan balance and reduce the interest charged.
These products are offered by a limited number of lenders, and their rules, rates, and fees vary a great deal. Treat this calculator as a way to size the potential benefit, then check what your lender actually offers.
It depends on how much cash you keep in it and for how long. On a 380,000 balance at 6.5% with 28 years left, a 40,000 starting offset plus 500 a month cuts total interest from about 446,100 to about 193,500 — roughly 252,600 saved — and clears the loan about 8 years 6 months sooner.
The saving comes from two places: the interest not charged, and the fact that a fixed payment then covers more principal each month. Even a flat 40,000 with no further deposits saves around 156,900.
Compare your mortgage rate against your savings rate after tax. Savings interest is taxable income, while offset savings are simply a cost you avoid, so a 6.5% mortgage at a 24% marginal rate is worth about the same as a savings account paying 8.55% before tax.
In the example above, the same cash in a 4% savings account would earn about 106,900, or 81,300 after tax — well short of the 252,600 the offset saves. The offset only loses when your after-tax savings rate beats your mortgage rate.
Because you are not earning anything. An offset account reduces a cost rather than generating income, and avoided interest is not a taxable event in the way earned interest is.
That is why the comparison has to be made after tax. To match a 6.5% mortgage offset, a saver in the 24% bracket would need a savings account paying about 8.55%, and someone in the 35% bracket would need about 10%.
It depends on the product. Some recalculate the payment downward, which gives you monthly cash flow but little long-term saving. Others keep the payment fixed, so the interest you save is absorbed as extra principal and the loan finishes years early.
This calculator assumes the payment stays fixed, which is where the large interest and time savings come from. If your lender lowers the payment instead, you can recreate the same result by paying the original amount voluntarily.
Not every product offsets your full balance. Effectiveness is the share of your linked balance that counts — a full offset is 100%, while partial products may only count 75% or 50%. A cap is a hard ceiling on how much can offset, regardless of how much you hold.
Both reduce the benefit meaningfully. On the example loan, a flat 40,000 at 100% saves about 156,900, but only about 125,100 at 75% effectiveness and about 89,000 at 50%. Enter your product’s real terms rather than assuming a full offset.
Offset and all-in-one products often carry a higher interest rate than a comparable standard mortgage, and many charge an annual or monthly account fee. A rate premium can cancel out the offset benefit entirely if your linked balance is small, and this calculator uses a single rate for both scenarios — so compare the offset rate against the plain-mortgage rate you would otherwise be quoted.
Many are also adjustable rather than fixed, which adds rate risk over a long term. The benefit also only exists while the money sits there — spend the balance and the saving stops.
General Estimating Notice: This calculator compares two amortization schedules using the balance, rate, term, offset balance, deposits, effectiveness, cap, savings APY, tax rate, and fees you enter. It assumes your payment stays fixed, that the offset balance remains in place, that interest is calculated monthly rather than daily, and that the same interest rate applies with or without the offset — offset and all-in-one products often price higher, which would reduce the benefit shown. Offset products are not offered by every US lender and their rules differ. Figures are illustrations, not an offer, a quote, or financial or tax advice. Confirm product terms, fees, and tax treatment with your lender and a qualified tax professional. For planning purposes only.