Offset mortgage calculator
See how much interest you could save by keeping money in an offset account. Your repayments stay the same, but you pay off your loan faster.
How to use the RatePal offset mortgage calculator
Our free offset calculator models exactly how much interest you could save by keeping your savings in an offset account linked to your mortgage. Enter your loan details and savings below, and the calculator runs a month-by-month simulation showing total interest saved, months shaved off your loan and a yearly breakdown — all in seconds.
Step-by-step instructions
Enter your loan details
Set the Property value and Deposit using the sliders or type directly. These values sync automatically across all RatePal calculators, so if you've already used our mortgage calculator, your numbers will carry over. The loan amount is calculated as the property value minus your deposit.
Set the interest rate
Enter the annual Interest rate on the offset portion of your mortgage. If you're unsure, check our offset mortgage comparison for current rates from NZ lenders. Keep in mind that offset accounts are typically available on floating rates, which may be higher than fixed rates.
Add your savings
Fill in three fields: your Current savings (lump sum already available), Monthly savings (how much you add each month) and your Everyday balance (the average amount sitting in your transaction account). The calculator combines all three to model your growing offset balance over time.
Read the results
The results panel shows two scenarios side by side: Without offset and With offset. Compare the monthly payment, total interest paid and months to pay off. Expand the yearly breakdown to see exactly when the offset starts making the biggest impact. Try adjusting your savings to see how even small changes compound over time.
Tip — how offset balances grow over time
The calculator doesn't assume a static offset balance. It models your savings growing month by month: starting with your current savings plus everyday balance, then adding your monthly contribution each month. This means the longer you hold the mortgage, the larger your offset becomes — and the faster your interest savings compound. Even modest monthly contributions of $500–$1,000 can make a dramatic difference over a 25-year term.
How offset mortgage accounts work in New Zealand
An offset account is one of the most effective ways to reduce the interest on your home loan while keeping your savings fully accessible. Here's how the mechanics work and how offset compares to other strategies available to NZ borrowers.
What is an offset mortgage account?
An offset account is a savings or transaction account linked to your home loan. The balance in that account is deducted from your mortgage principal before interest is calculated each day. Your scheduled repayment stays the same, but because interest is charged on a lower effective balance, more of each payment goes toward reducing your actual debt — and you pay the loan off faster.
For example, if you owe $600,000 on your mortgage and have $50,000 sitting in your offset account, interest is only charged on $550,000. You still make the same monthly repayment, but you're effectively eliminating the interest on that $50,000 — which, at 6.50%, saves you roughly $3,250 per year.
Crucially, your money stays liquid. Unlike making extra repayments directly into your loan (which typically require a redraw or refinancing to access), funds in an offset account can be withdrawn at any time for emergencies, holidays or other expenses.
Tip — the tax advantage
Interest earned on a regular savings account is taxable in New Zealand (at your marginal rate, or the PIE rate). But savings in an offset account don't earn interest — they reduce the interest you pay. The effective return equals your mortgage rate, and it's completely tax-free. At a 6.50% mortgage rate, you'd need to earn roughly 8–9% pre-tax on a savings account to match the same benefit.
Offset vs revolving credit: what's the difference?
Both offset and revolving credit reduce your mortgage interest using your spare cash, but they work quite differently. Use the comparison below to decide which suits your situation — or model both options with our Mortgage Optimizer.
| Feature | Offset account | Revolving credit |
|---|---|---|
| Structure | Separate savings or transaction account linked to your mortgage | Portion of your mortgage set up as an overdraft facility |
| Repayments | Fixed scheduled repayments — unchanged regardless of offset balance | No fixed repayments — you manage the balance yourself |
| Interest calculation | Daily — offset balance reduces the principal used for interest | Daily — any balance below the facility limit reduces interest |
| Access to funds | Full access via the linked account, separate from the mortgage | Funds drawn directly from the mortgage facility |
| Discipline required | Lower — savings sit in a separate account, harder to accidentally spend | Higher — easy to redraw and erode your progress |
| NZ availability | BNZ (TotalMoney), Westpac (Choices Offset), Kiwibank | All major NZ banks — ANZ, ASB, BNZ, Kiwibank, Westpac |
| Typical fees | $0–$50 per year | $0–$50 per year |
In short, offset suits borrowers who prefer a clear separation between their savings and their mortgage — the structure removes the temptation to dip into funds. Revolving credit works better for disciplined borrowers who want their salary to reduce interest between pay cycles. Both achieve a similar interest-saving result; the right choice depends on your spending habits.
Offset vs extra repayments
Making extra repayments directly onto your mortgage reduces your principal permanently, which lowers the interest charged every subsequent month. The catch? Once the money goes in, it's locked away — you generally can't access it without refinancing or applying for a redraw facility, and some lenders charge break fees if you overpay during a fixed term.
An offset account delivers the same interest-saving effect (dollar for dollar) but keeps your money fully liquid. You can withdraw at any time for an emergency, a renovation or a career change without touching your mortgage structure. For borrowers who value flexibility — or who expect large expenses in the near future — offset is usually the better strategy. If you're confident you won't need the cash back, lump-sum extra repayments will achieve the same result without the annual account fee.
Example calculations
Below are three worked examples showing how an offset account can save you interest and shorten your loan. All figures use the same PMT formula as our calculator and assume principal-and-interest repayments.
Static offset — $30,000 on a $500,000 loan
A $500,000 loan at 6.50% over 30 years with $30,000 held in an offset account (no additional contributions):
$637,722 total interest
360 months to pay off
$488,042 total interest
313 months to pay off
Even a static $30,000 saves $149,680 in interest and takes almost 4 years off the loan — without changing your monthly repayment of $3,160.
Growing offset — $50,000 plus $1,000 per month
Same $500,000 loan at 6.50% over 30 years, but now with $50,000 in initial savings and $1,000 added to the offset account each month:
$637,722 total interest
360 months (30 years)
$228,970 total interest
231 months (19.3 years)
With regular contributions the offset balance grows rapidly, saving $408,753 in interest and cutting nearly 11 years off the loan. This illustrates the power of combining a lump sum with consistent monthly savings.
Larger loan — $800,000 with offset and everyday balance
An $800,000 loan at 6.00% over 25 years with $80,000 initial savings, $500 monthly contributions and a $5,000 everyday balance:
$746,323 total interest
300 months (25 years)
$419,096 total interest
237 months (19.8 years)
On a larger Auckland or Wellington-sized mortgage, the offset saves $327,227 in interest and over 5 years of repayments. The everyday transaction balance adds a meaningful boost because interest is calculated daily.
Figures are indicative and based on current inputs. Use the calculator above for your exact scenario, or compare live offset rates from NZ lenders.
Tips to maximise your offset savings
- Consolidate your accounts
- Direct your salary, savings and everyday spending through your offset account (or accounts linked to it). The more cash sitting against your mortgage at any given moment, the less interest you pay. BNZ TotalMoney, for example, lets you link up to 50 accounts.
- Time your bill payments
- Pay bills as late as the due date allows. Every extra day your money sits in the offset account reduces your daily interest charge. Set up automatic payments for the last possible date rather than paying early.
- Compare offset to a savings account
- A regular NZ savings account might offer 4–5% interest, but that's taxable at your marginal rate. Savings in an offset account effectively earn your mortgage rate (e.g. 6.50%) completely tax-free. For most borrowers, the offset delivers a significantly better after-tax return.
- Review at each re-fix date
- When your fixed-rate term ends, consider whether to increase the offset portion of your mortgage. If your savings have grown, a larger offset tranche will save you more. Use the Mortgage Optimizer to model different split structures before you re-fix.
Frequently asked questions
How much can I save with an offset account in NZ?
It depends on your offset balance and mortgage rate. As a rough guide, $50,000 held against a $600,000 loan at 6.50% could save around $168,000 in interest over 25 years and shorten the loan by about 3.4 years — even without adding a cent to the offset after day one. Regular contributions increase the saving substantially. Use our offset calculator to model your exact scenario.
Is an offset account worth the fees?
Almost always. Most NZ banks charge between $0 and $50 per year for an offset facility. Even with just $10,000 in the account at a 6% mortgage rate, you save roughly $600 per year in interest — the fee pays for itself many times over. The break-even balance is typically under $1,000.
Do I earn interest on money in an offset account?
No. Money in an offset account does not earn interest in the traditional sense. Instead, it reduces the interest charged on your mortgage. The effect is equivalent to earning a tax-free return at your mortgage rate. At 6.50%, that's significantly better than most NZ savings accounts after tax.
Which NZ banks offer offset mortgages?
As of 2026, the main providers are BNZ (TotalMoney — link up to 50 accounts), Westpac (Choices Offset Floating) and Kiwibank (Offset Mortgage — link up to 8 accounts). ANZ and ASB do not currently offer offset accounts but do provide revolving credit facilities. See our offset mortgage comparison for the latest rates and features.
Can I use an offset account with a fixed-rate mortgage?
It depends on the lender. Westpac's offset is available only on their floating rate product. BNZ TotalMoney can be linked to both fixed and floating portions. Kiwibank offers offset on their floating facility. If you want the certainty of a fixed rate plus the benefit of offset, consider splitting your loan — fix the majority and leave a portion on a floating offset. Our Mortgage Optimizer can help you find the right split.