Dolla

Offset vs Invest Calculator

Compare keeping spare money in your mortgage offset with investing it. You can also see an example of borrowing against your home to invest, known as debt recycling.

How this tool works

Reviewed 12 September 2026. General mortgage-offset and investment assumptions.

Calculation outline

  1. Treats money in offset as reducing the mortgage balance charged interest, then projects the same starting cash and contributions through an investment path.
  2. Applies the entered investment return, simplified tax rate, fees and optional debt-recycling assumptions before comparing end values.
  3. Pays investment-split interest on the opening balance each month from the same original mortgage-payment-plus-surplus budget, with an immediate full tax benefit. Recycles the remainder at month end. Interest is not subtracted again from terminal wealth.
  4. Solves breakeven with the same model, including fees, offset saturation, payoff and the investment-split rate. Marginal offset rate is the mortgage rate before fees on cash up to the remaining loan, not an effective return on all cash.

Worked example

Example: $50,000 held in offset against a $680,000 mortgage means interest is initially modelled on $630,000.

Limits

  • The model assumes the offset is correctly linked and does not model changing rates, lender-specific repayment rules or redraw access.
  • Tax on investments and debt recycling is simplified; deductibility depends on how borrowed funds are used and documented.
  • Nominal annual rates are divided by 12; investment tax and fees apply monthly. Capital gains, franking and fee deductibility are excluded. Selling investments to cover interest may affect actual tax and tracing, which this illustration does not model.
  • If cash and investments cannot cover costs, no borrowing, winner or numeric gap is assumed. Breakeven is N/A for such cases or if no unique funded crossing is found between -100% and 100%. Interest saved compares against the original mortgage without offset or recycling, before fees.

Sources

This tool provides general information and illustrative estimates only. It does not consider your objectives, financial situation or needs and is not personal financial, tax or legal advice.