Feature article
What is an offset mortgage & is it for you?
Everything you need to know about this handy mortgage feature.
26 November 2025
AI summary
An offset mortgage helps you save interest by linking your savings to your home loan. The balance in these accounts reduces the portion of your loan that accrues interest, helping you pay off your mortgage faster while keeping your savings fully accessible.
This structure is ideal for those with substantial savings or irregular income. However, offset loans are typically on a higher floating interest rate, and the benefits are minimal without a healthy savings balance.
What is an offset mortgage?
Example: Kev’s offset loan
Is an offset mortgage a good idea?
The benefits of an offset mortgage
What is the downside of an offset account?
Which banks offer offset mortgages in NZ?
Offset mortgage vs revolving credit: what’s the difference?
| Offset mortgage | Revolving credit | ||||
|---|---|---|---|---|---|
| Account structure | Account structure | Loan is separate from linked everyday/savings accounts. | Loan is separate from linked everyday/savings accounts. | One big account that functions as your loan and everyday spending account (like a large overdraft). | One big account that functions as your loan and everyday spending account (like a large overdraft). |
| Savings access | Savings access | Easy access to linked savings; your withdrawals immediately increase the interest charged. | Easy access to linked savings; your withdrawals immediately increase the interest charged. | Your everyday balance reduces the interest. You can redraw funds up to your limit. | Your everyday balance reduces the interest. You can redraw funds up to your limit. |
| Discipline required | Discipline required | Moderate discipline. You still have structured principal repayments. | Moderate discipline. You still have structured principal repayments. | High discipline. Easy to overspend or not pay down the principal if not careful. | High discipline. Easy to overspend or not pay down the principal if not careful. |
| Best for | Best for | People with solid, consistent savings/emergency funds, or investors. | People with solid, consistent savings/emergency funds, or investors. | High-income earners with irregular cash flow who are highly disciplined. Often used to fund renovations. | High-income earners with irregular cash flow who are highly disciplined. Often used to fund renovations. |
Offset mortgage FAQs
Talk to a mortgage professional
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