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GrowThenDraw
Updated for 2026-27

Mortgage Offset vs Extra Repayments vs Investing

Compare three uses of the same monthly spare cash and see the interest, loan timeline, end position and gross investment return needed to beat the offset.

Published by GrowThenDraw Editorial Team · Editorial policy · Methodology & sources

Loan and monthly choice

$
%
years
$

Offset product

$
$
%

Difference versus the cheapest otherwise-comparable loan available to you.

Invest instead

%
%
%

Editable simplification for income distributions and realised gains.

Investing finishes ahead in this scenario
$555,261
advantage over the second-best strategy at the original term
Offset net position
$376,400
Extra repayment position
-$0
Invest net position
$931,661
Invest break-even return
1.55%
Interest and timing
Scheduled repayment
$3,597
Offset interest saved
$356,833
Extra-repayment interest saved
$320,590
Extra-repayment payoff
17y 8m
Interest saved by offset: $356,833Interest paid with offset: $338,197
Interest saved by offsetInterest paid with offset
$890K$1.8MYear 0: effective offset debt $580,000, extra-repayment debt $600,000, invest-strategy debt $600,000Year 0: effective offset debt $580,000, extra-repayment debt $600,000, invest-strategy debt $600,000Year 0: effective offset debt $580,000, extra-repayment debt $600,000, invest-strategy debt $600,000Year 1: effective offset debt $559,125, extra-repayment debt $580,296, invest-strategy debt $592,632Year 1: effective offset debt $559,125, extra-repayment debt $580,296, invest-strategy debt $592,632Year 1: effective offset debt $559,125, extra-repayment debt $580,296, invest-strategy debt $592,632Year 2: effective offset debt $536,963, extra-repayment debt $559,377, invest-strategy debt $584,809Year 2: effective offset debt $536,963, extra-repayment debt $559,377, invest-strategy debt $584,809Year 2: effective offset debt $536,963, extra-repayment debt $559,377, invest-strategy debt $584,809Year 3: effective offset debt $513,433, extra-repayment debt $537,168, invest-strategy debt $576,504Year 3: effective offset debt $513,433, extra-repayment debt $537,168, invest-strategy debt $576,504Year 3: effective offset debt $513,433, extra-repayment debt $537,168, invest-strategy debt $576,504Year 4: effective offset debt $488,453, extra-repayment debt $513,589, invest-strategy debt $567,687Year 4: effective offset debt $488,453, extra-repayment debt $513,589, invest-strategy debt $567,687Year 4: effective offset debt $488,453, extra-repayment debt $513,589, invest-strategy debt $567,687Year 5: effective offset debt $461,931, extra-repayment debt $488,556, invest-strategy debt $558,326Year 5: effective offset debt $461,931, extra-repayment debt $488,556, invest-strategy debt $558,326Year 5: effective offset debt $461,931, extra-repayment debt $488,556, invest-strategy debt $558,326Year 6: effective offset debt $433,774, extra-repayment debt $461,979, invest-strategy debt $548,388Year 6: effective offset debt $433,774, extra-repayment debt $461,979, invest-strategy debt $548,388Year 6: effective offset debt $433,774, extra-repayment debt $461,979, invest-strategy debt $548,388Year 7: effective offset debt $403,881, extra-repayment debt $433,762, invest-strategy debt $537,836Year 7: effective offset debt $403,881, extra-repayment debt $433,762, invest-strategy debt $537,836Year 7: effective offset debt $403,881, extra-repayment debt $433,762, invest-strategy debt $537,836Year 8: effective offset debt $372,143, extra-repayment debt $403,806, invest-strategy debt $526,634Year 8: effective offset debt $372,143, extra-repayment debt $403,806, invest-strategy debt $526,634Year 8: effective offset debt $372,143, extra-repayment debt $403,806, invest-strategy debt $526,634Year 9: effective offset debt $338,448, extra-repayment debt $372,001, invest-strategy debt $514,741Year 9: effective offset debt $338,448, extra-repayment debt $372,001, invest-strategy debt $514,741Year 9: effective offset debt $338,448, extra-repayment debt $372,001, invest-strategy debt $514,741Year 10: effective offset debt $302,675, extra-repayment debt $338,235, invest-strategy debt $502,114Year 10: effective offset debt $302,675, extra-repayment debt $338,235, invest-strategy debt $502,114Year 10: effective offset debt $302,675, extra-repayment debt $338,235, invest-strategy debt $502,114Year 11: effective offset debt $264,695, extra-repayment debt $302,386, invest-strategy debt $488,709Year 11: effective offset debt $264,695, extra-repayment debt $302,386, invest-strategy debt $488,709Year 11: effective offset debt $264,695, extra-repayment debt $302,386, invest-strategy debt $488,709Year 12: effective offset debt $224,373, extra-repayment debt $264,326, invest-strategy debt $474,477Year 12: effective offset debt $224,373, extra-repayment debt $264,326, invest-strategy debt $474,477Year 12: effective offset debt $224,373, extra-repayment debt $264,326, invest-strategy debt $474,477Year 13: effective offset debt $181,564, extra-repayment debt $223,919, invest-strategy debt $459,367Year 13: effective offset debt $181,564, extra-repayment debt $223,919, invest-strategy debt $459,367Year 13: effective offset debt $181,564, extra-repayment debt $223,919, invest-strategy debt $459,367Year 14: effective offset debt $136,114, extra-repayment debt $181,020, invest-strategy debt $443,325Year 14: effective offset debt $136,114, extra-repayment debt $181,020, invest-strategy debt $443,325Year 14: effective offset debt $136,114, extra-repayment debt $181,020, invest-strategy debt $443,325Year 15: effective offset debt $87,861, extra-repayment debt $135,474, invest-strategy debt $426,293Year 15: effective offset debt $87,861, extra-repayment debt $135,474, invest-strategy debt $426,293Year 15: effective offset debt $87,861, extra-repayment debt $135,474, invest-strategy debt $426,293Year 16: effective offset debt $36,632, extra-repayment debt $87,120, invest-strategy debt $408,211Year 16: effective offset debt $36,632, extra-repayment debt $87,120, invest-strategy debt $408,211Year 16: effective offset debt $36,632, extra-repayment debt $87,120, invest-strategy debt $408,211Year 17: effective offset debt $0, extra-repayment debt $35,783, invest-strategy debt $389,014Year 17: effective offset debt $0, extra-repayment debt $35,783, invest-strategy debt $389,014Year 18: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $375,562Year 18: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $368,633Year 19: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $346,994Year 20: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $324,022Year 21: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $299,632Year 22: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $280,357Year 22: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $273,738Year 23: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $246,246Year 24: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $217,060Year 25: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $186,073Year 26: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $153,174Year 27: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $118,247Year 28: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $81,165Year 29: effective offset debt $0, extra-repayment debt $0, invest-strategy debt $41,797Now6y12y18y22y28y30y
Effective debt after offsetDebt after extra repaymentsDebt while investing

Year-by-year comparison

YearEffective offset debtOffset cashExtra-repayment debtInvest-strategy debtInvestment
Now$580,000$20,000$600,000$600,000$0
1$559,125$31,880$580,296$592,632$12,313
2$536,963$43,760$559,377$584,809$25,334
3$513,433$55,640$537,168$576,504$39,104
4$488,453$67,520$513,589$567,687$53,665
5$461,931$79,400$488,556$558,326$69,064
6$433,774$91,280$461,979$548,388$85,348
7$403,881$103,160$433,762$537,836$102,569
8$372,143$115,040$403,806$526,634$120,780
9$338,448$126,920$372,001$514,741$140,038
10$302,675$138,800$338,235$502,114$160,403
11$264,695$150,680$302,386$488,709$181,939
12$224,373$162,560$264,326$474,477$204,714
13$181,564$174,440$223,919$459,367$228,798
14$136,114$186,320$181,020$443,325$254,267
15$87,861$198,200$135,474$426,293$281,200
16$36,632$210,080$87,120$408,211$309,682
17$0$221,960$35,783$389,014$339,802
17.666666666666668$0$229,880$0$375,562$360,838
18$0$233,840$0$368,633$371,654
19$0$245,720$0$346,994$405,337
20$0$257,600$0$324,022$440,957
21$0$269,480$0$299,632$478,625
21.75$0$278,390$0$280,357$508,291
22$0$281,360$0$273,738$518,459
23$0$293,240$0$246,246$560,583
24$0$305,120$0$217,060$605,130
25$0$317,000$0$186,073$652,238
26$0$328,880$0$153,174$702,055
27$0$340,760$0$118,247$754,736
28$0$352,640$0$81,165$810,446
29$0$364,520$0$41,797$869,360
30$0$376,400$0$0$931,661

An offset saves mortgage interest without reducing access to cash

A 100% offset account reduces the loan balance used to calculate interest. The saving behaves like a tax-free return equal to the mortgage rate because it is interest avoided rather than investment income.

The economic benefit can be reduced by account fees or a higher package rate. Enter both explicitly. Redraw is different from an offset, and legal or tax consequences can differ—especially if a former home later becomes an investment property.

Every strategy gets the same monthly cash budget

The comparison puts your spare cash into the offset, pays it directly against principal, or invests it at month end. The scheduled mortgage payment and original term are held constant so one option is not quietly given more money.

The offset balance remains an asset at the end of the term. Extra repayments reduce debt faster. The invest scenario keeps the scheduled loan and accumulates a portfolio after the entered fee and annual tax-drag assumption.

The break-even return makes risk visible

The calculator solves the gross annual investment return that would be needed for the investment portfolio to equal the offset result after the fee and tax-drag assumptions. Returns above that figure are not guaranteed and may arrive unevenly.

Australian lenders commonly calculate interest daily while this educational comparison uses a monthly approximation and a constant rate. Use your lender's product sheet for exact interest, repayment and offset eligibility.

Frequently asked questions

Is money in an offset account the same as making extra repayments?

Both can reduce interest, but an offset is a separate transaction account while an extra repayment reduces the loan. Access, fees, redraw conditions and future tax consequences can differ.

What return does an offset account earn?

It does not pay interest. Its gross economic benefit is approximately the mortgage rate because it avoids non-deductible interest, before offset fees or any higher loan rate.

Does the calculator include investment tax?

It uses your editable annual tax-drag assumption after investment fees. It cannot model the timing of distributions, franking credits, capital gains, losses or your exact marginal rate.

Why might extra repayments beat an offset?

An offset can have fees or a rate premium, while direct extra repayments may not. Extra repayments also enforce less liquidity, which can help or hurt depending on your needs.

Are the results exact to my lender statement?

No. The model uses monthly interest and fixed rates; many lenders calculate interest daily and product conditions vary.

Rules verified 1 August 2026 against official Australian sources:

Educational estimate only—not financial, credit or tax advice. Confirm current rules, eligibility and account data with the ATO, your fund, lender or a licensed professional.