Mortgage guide · New Zealand
Offset vs Revolving Credit Mortgage NZ
Compare offset and revolving-credit mortgages in New Zealand, including how savings reduce interest, access to money, account structure and discipline risks.
Reviewed 26 August 2026
Reviewed by KiwiTools editorial team — NZ mortgage researchers using government and lender-source methodology
General information only, not financial, lending or legal advice. Ask the lender for a current written quote, fee and contract-specific repayment limits.
Key points
Offset and revolving credit compared
An offset loan links eligible savings so interest is calculated on the loan balance less the offset amount, subject to product terms.
Revolving credit operates more like a large transaction-account credit limit, with deposits and withdrawals changing the balance.
Both can reduce interest for disciplined borrowers, but rates, fees, repayment rules, account access and overspending risk differ.
Offset and revolving credit compared
Both reward cash balances, but one keeps savings separate while the other turns the loan into a transactional credit facility.
| Check | Offset mortgage | Revolving credit |
|---|---|---|
| Savings location | Linked separate accounts | Inside the loan account |
| Interest charged on | Loan less eligible linked balances | Daily drawn balance |
| Spending discipline | Clearer account boundaries | Stronger discipline required |
| Best fit | Multiple savers or earmarked cash | Irregular income and active cash management |
Offset keeps savings visible
An offset mortgage links eligible savings accounts to a loan portion. If the loan is $80,000 and linked balances total $25,000, interest is generally calculated on the $55,000 net position while the cash remains in separate accounts.
That separation suits households that earmark money for tax, emergencies or different family members. Check which accounts qualify and whether credit interest is forgone.
Revolving credit puts cash flow inside the debt
A revolving facility behaves more like a large transactional overdraft. Salary reduces the drawn balance; spending lifts it again. It can work beautifully for irregular income and disciplined spending.
It can also hide overspending because available credit looks like cash. Anyone who regularly spends to the limit is usually better served by clearer boundaries.
Related: split mortgage fixed terms Related: mortgage repayments Related: extra mortgage repayments
Choose by behaviour before comparing the rate
Both structures can reduce daily interest when spare cash is present. The decisive difference is whether separate accounts improve control or one combined account improves cash management.
Keep the flexible portion no larger than the cash likely to offset or actively repay. Paying a floating premium on a huge unused facility defeats the point.
Frequently asked questions
What is the difference between offset and revolving credit?
Offset keeps linked savings separate while reducing the interest-bearing amount; revolving credit directly changes the outstanding account balance as money moves.
Do offset savings repay the mortgage?
No. They reduce the balance used for interest while remaining in eligible linked accounts, subject to product terms.
Is revolving credit risky?
It can be for borrowers who repeatedly spend available credit, because easy access can prevent principal reduction.
Should my whole mortgage be offset?
Not automatically. Compare average eligible savings with the flexible loan portion, rate, fees and repayment requirements.
Put the guide into practice
Continue with related KiwiTools calculators
Test your own numbers, compare scenarios and return to the guide to check assumptions and limitations.