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 links your savings and everyday accounts to your home loan, reducing the loan balance that interest is charged on. This helps you save money and pay off your mortgage faster while keeping your savings fully accessible.

They are ideal for disciplined savers or those with irregular income. The main drawback is that offset loans are usually on a floating rate, which is typically higher than fixed rates. They differ from revolving credit loans, which require more financial discipline.

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 vs revolving credit
	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.