Finance & business New Zealand
Offset Mortgage Calculator New Zealand
An offset mortgage or a revolving credit account charges interest only on the loan balance minus the cash you keep against it. Enter your loan and the average balance you hold in the offset to see the interest saved, the years taken off, and the savings rate you would need to match it.
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The cash that stays against the loan.
Used for the savings-rate comparison. Interest on savings is taxable; interest saved on a home loan is not.
Interest saved
—Repayment each month
—
Interest without the offset
—
Interest with the offset
—
Years sooner
—
Offset as a return, before tax
—
Savings rate needed to match
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The comparison
An estimate, not advice. General information and estimates only, not financial or tax advice. Rates, thresholds and rules change, so check the figures for your situation and speak to a registered adviser before you act.
How much does an offset mortgage save?
Interest is charged on the loan less the offset balance. With $40,000 in the offset on a $600,000 loan at 5.8% over 30 years, you save about $158,030 in interest and clear the loan about 3.7 years sooner, as long as you keep the repayment the same.
Offset or revolving credit
With an offset account, your savings sit in a separate account linked to the loan and reduce the interest. With revolving credit, you pay your income into the loan itself and draw on it for spending, which means the same effect without a separate account. Both reduce the interest as long as the money is there. Many borrowers use revolving credit for a portion of the loan and fixed rates for the rest.
Who benefits most
The bigger the balance you keep and the longer you keep it, the more interest you save. It suits people who hold a lot of cash, such as a deposit for a renovation or an emergency fund. If you tend to spend what is in the account, the saving shrinks, and a fixed rate might beat a floating one.
To compare the effect of regular extra payments, use the extra repayments calculator.
How this is calculated
The rule, step by step, so you can check any figure by hand.
monthly repayment = loan × r ÷ (1 − (1 + r)^−n), with r = rate ÷ 12each month: interest = (balance − offset balance) × rinterest saved = interest without the offset − interest with itthe repayment stays the same, so the loan clears soonersavings rate to match = loan rate ÷ (1 − your tax rate on interest)
An offset mortgage or revolving credit effectively pays you the loan rate on your cash, and that return is free of tax, because you save interest rather than earn it. A taxpayer on a 33% rate would need a savings account paying about 8.7% to match a 5.8% loan. That is why holding cash against the loan usually beats a savings account.
The cost is that some structures charge a higher rate or a fee. New Zealand banks offer offset in different ways, such as a linked everyday account, a revolving credit facility where your pay goes in and bills come out, or a flexible-term product. Check the fees and the rate on the part that is linked.
A worked example
A $600,000 loan at 5.8% over 30 years with $40,000 kept in the offset, tax rate 33%.
- Repayment$3,520.52
- Interest without$667,387
- Interest with$509,357
- Interest saved$158,030
- Years sooner3.7
$158,030 saved and 3.7 years sooner.
A savings account would need a much higher rate to match.
The tax angle
Interest you earn on savings is taxable at your rate, while interest you avoid paying on your home loan is not. That makes an offset worth more than its headline rate, especially for people on higher rates. The tool shows the savings rate you would need to match it.
What it leaves out
Rate changes, fees and changes in your offset balance are not modelled. A revolving credit facility usually has a floating rate, which can differ from a fixed rate.
What this calculator does not do
- Constant rate and offset balance
- Level repayment
- Fees not included
- An estimate, not advice
Common questions
What is an offset mortgage?
A loan where interest is charged on the balance minus linked savings.
What is revolving credit?
A loan facility you pay income into and draw from, reducing interest.
Is the interest saved taxed?
No. Interest on savings is taxable, which is why offsets beat savings accounts.
Does the loan clear sooner?
Yes, if you keep the repayment the same.
Are there fees?
Some products carry fees or a higher rate; check the terms.
Where these numbers come from
- Sorted — Retirement Commission money guidance Independent guidance on budgeting, renting and tax
Method last reviewed 2026-10-28 This calculator uses fixed rules rather than rates that change, and its method is re-checked against the sources above at least once a year. Out of date? Tell us and we will fix it.
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