Does your mortgage offset balance cover its fee?

Use the average balance, rate and annual cost

A simple first-pass break-even is annual offset cost divided by the home-loan interest rate. If the annual cost is A$120 and the assumed rate is 6%, the break-even average offset balance is A$2,000. An average balance above that level may reduce more interest than the feature cost; a lower balance may not. This is an approximation, not a quote or recommendation.

Moneysmart explains that an offset is a transaction account linked to a home loan and that its balance reduces the loan amount charged interest. It also warns that an offset may not be worthwhile with a low balance, higher fees or a higher loan rate. This article is educational and has no commission relationship with the official links below.

Source: Moneysmart — Mortgage offset accounts

Measure the balance the lender can use each day

Moneysmart says most home-loan interest is calculated daily, so a month-end screenshot is a poor substitute for the balance held through the month. Export daily balances if available, or use the lowest defensible average from several statement periods. Exclude money that must leave for bills shortly after payday rather than treating a temporary peak as permanent.

Confirm that the account is linked to the eligible loan and whether the offset is full or partial. Also identify every incremental cost: monthly feature fee, annual package fee, account fee, or a loan-rate difference compared with an otherwise suitable alternative. Do not subtract fees that you would pay even without the offset arrangement.

Source: Moneysmart — Mortgage offset accounts

Work a transparent break-even example

The CommBank page no longer displayed the previously cited A$10 monthly Offset Feature fee when rechecked on 1 October 2026. Keep A$10 only as a hypothetical input: twelve months would be A$120. At an assumed 6% home-loan rate, A$3,000 held for a full year gives a simple estimated interest reduction of A$180, leaving A$60 after that hypothetical cost.

The issuer page still explains which loan configurations can link an offset. Get the current incremental cost from your own contract or fee document; do not treat the old page display or this hypothetical amount as a current quote.

Source: Commonwealth Bank — Home loan interest offset

Test a scenario that changes the answer

If the average offset balance falls to A$1,000 while the assumed rate stays at 6%, the simple estimated interest reduction is A$60. Against the same A$120 annual feature cost, the difference becomes negative A$60. The conclusion reverses even though the product and rate did not change.

A lower rate also raises the required balance: A$120 divided by 4.5% gives a break-even average of about A$2,666.67. This is why one good month is not enough evidence. Repeat the test using a conservative balance and at least one lower-rate or higher-cost scenario.

Source: Moneysmart — Mortgage offset accounts

Do not compare the feature in isolation

Moneysmart says to compare the lender’s fees and rates and to check access conditions. A cheaper offset feature can still sit inside a more expensive loan, while a redraw facility is not the same as a transaction account and can have different access rules. Compare total loan pricing and useful features over the period you expect to keep them.

This break-even does not measure switching costs, borrowing capacity, future rate paths or the value of access to cash. It also does not prove that a particular offset structure is suitable. Ask the lender to identify the exact loan, linked account, offset percentage and all incremental costs in writing.

Source: Moneysmart — Mortgage offset accounts · Commonwealth Bank — Home loan interest offset

Make a one-page offset audit

Record your average offset balance, current loan rate and every incremental annual cost. Calculate balance × rate for a simple annual estimate, subtract the costs, and repeat with a lower balance and lower rate. Then compare the whole loan—not only the offset label—with an otherwise suitable alternative.

Your next step is to export three months of offset balances and use the conservative average in the calculation. Obtain the current feature and package costs from your own lender’s contract or fee document before acting.

Source: Moneysmart — Mortgage offset accounts · Commonwealth Bank — Home loan interest offset

Changes to this guide

23 September 2026: First publication after primary-source verification, arithmetic recalculation, counter-scenario testing and cross-network originality screening.

1 October 2026: Rechecked CommBank; removed the former A$10 display as a current claim and retained it only as a clearly hypothetical formula input.