Offset vs Revolving Credit Mortgages: Which Saves More?

The shared idea: your cash should fight your mortgage

Money sitting in a savings account earns taxed interest at a lower rate than your mortgage charges. Both offset and revolving facilities eliminate that gap by making spare cash reduce mortgage interest daily — a guaranteed, tax-free return at your mortgage rate.

How an offset mortgage works

You hold a floating loan portion, and nominate everyday/savings accounts to 'offset' it. If you owe $100k on the offset portion and hold $20k across linked accounts, you pay interest on $80k. Your money stays in your own named accounts — psychologically separate, instantly accessible.

How revolving credit works

Your salary lands directly into the loan account itself, cutting the balance immediately; spending draws it back up. Done well, every dollar you earn spends its idle days reducing your loan. It's one account — powerful, but the credit limit sits there looking like spendable money.

Head to head

The structure most people actually want

Because offset and revolving portions run at floating rates, putting your whole mortgage in one is expensive. The classic structure fixes the bulk of the loan at sharp rates and holds a right-sized flexible portion — roughly your savings buffer plus a few months of surplus — as offset or revolving credit. Sized correctly, the flexible portion costs nothing extra (it's fully offset) and saves years of interest.

Which banks offer what

Product names, fees and mechanics differ across NZ lenders, and not every bank offers a true offset. Which structure wins for you depends on your cash-flow shape — this is a ten-minute conversation with an adviser, and it's the kind of structural decision worth far more than a 0.05% rate difference.

Frequently asked questions

Does offsetting really save that much?

Holding a steady $20,000 offset against a floating portion at a ~6–7% mortgage rate saves roughly $1,200–$1,400 of interest a year, tax-free — and it compounds by keeping repayments chewing principal.

Is revolving credit dangerous?

Only if the available limit tempts you to spend it. Undisciplined use is why some borrowers go backwards. If budgets aren't your strength, an offset's separation is safer.

Can I have offset or revolving credit alongside fixed loans?

Yes — that's the standard structure: most of the loan fixed for cheap certainty, a right-sized flexible portion for your cash to work against.

Do all NZ banks offer offset mortgages?

No — true offset products exist at some banks and not others, with different fees and account limits. This is one of the genuine differences worth comparing between lenders.