Many Nzer’s are familiar with how a revolving credit mortgage works to reduce the overall interest cost. NZ Home Loans and Sovereign have been some of the pioneers in educating many on the art.
An offset mortgage does something very similar to a revolving credit but there are some important differences. But firstly what is the point?
Why offset?
The main reason of course is to reduce the overall interest bill. Banks in NZ calculate your interest bill on the daily balance of your home loan. So even leaving $50 in your home loan for a couple of weeks can save you some interest(tiny amount). But getting into the habit of being smart with your money over the long term can help.
An offset mortgage can be linked to many bank accounts. Basically the banks will then calculate your interest cost on your home loan after taking into account the credit balances in other accounts.
Can I link other peoples accounts?
Well interestingly with some banks you do have the ability to link parents and children’s bank accounts. They wont be getting any interest however.
Key difference to a revolving credit
You get multiple accounts and the psychological niceness of seeing lots of credit balances. The repayment stays the same regardless of all the credit balances, but the interest reduces. So more of the repayment goes towards paying the home loan off.
Who does offset?
From the lenders we deal with, BNZ and Westpac.
Where do I sign up?
Easy tiger, lets have a chat first. My Calendar
