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 to your home loan, reducing the interest you pay. The balance in these accounts "offsets" your loan principal, so you're charged interest on a smaller amount while keeping your cash fully accessible.
This can save you thousands and help you pay off your mortgage faster. The main drawback is that offset loans are usually on a floating interest rate, which can be higher than fixed rates. They are ideal for disciplined savers with a healthy emergency fund.
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
Author
Discover More
She’d never owned a home before buying this cute 1870s cottage. There was just one catch
A first-home buyer transformed a historic 1870s Wellington cottage into a character-filled home.
They found their dream home by accident. Now a devastating diagnosis is forcing them to sell
A dream Whanarua Bay home is being sold after a devastating cancer diagnosis changes their plans.
Search
Other articles you might like
