Mortgage Offset Calculator
Calculate how much an offset account saves on your NZ mortgage. Compares against keeping money in a regular savings account taxed at RWT.
About this calculator
This calculator implements NZ offset mortgage account mechanics from Kiwibank + Westpac NZ. Last consulted 18 May 2026. Verify the figures yourself by following the link.
NZ offset mortgage providers
Mid-2026 market- •Kiwibank Offset: Floating ~7.85%, up to 8 accounts linked
- •Westpac Choices Floating with Offset: Floating ~7.85%, single offset account
- •Tax-free saving (vs taxed savings): Saves interest at full rate
- •Break-even offset balance: ~30% of loan vs fixed
- •Compared to: 2-yr fixed: ~6.25% (no offset benefit)
Disclaimer
This calculator provides estimates for general information purposes only. Results should not be relied upon as professional financial, tax, or legal advice. Tax rates and thresholds are based on publicly available IRD data and may change. Always consult a qualified tax agent or financial adviser for advice specific to your circumstances.
How a NZ offset mortgage works
The offset account balance is subtracted from the loan balance for interest calculation — no interest is charged on the offset portion.
- 1
Calculate baseline interest
Baseline = (Loan × r) ÷ 12 each month
Interest charged on full balance.
- 2
Offset effective balance
Effective_loan = Loan − Offset_balance
Interest only charged on this reduced amount.
- 3
Interest saved per month
Monthly_saving = (Offset × r) ÷ 12
Tax-free saving (vs taxed interest in savings account).
- 4
Compare to taxed savings
Savings_alt = Offset × 4.5% × (1 − RWT_rate)
Offset wins if floating mortgage rate × (1 − tax) > savings rate.
Worked example
Inputs: $500k loan @ 7.85%, $40k offset, 30% RWT
Result: Saves $3,140/yr on offset (tax-free) vs $1,260/yr in 4.5% TD after RWT.
Frequently Asked Questions
How does an offset mortgage work in NZ?
Is an offset better than a fixed rate?
Can multiple family members link offset accounts to one mortgage?
Do I lose interest in my offset account?
The mortgage offset calculator shows how much interest an offset account saves on a NZ floating home loan, and compares it against leaving the same money in a savings account or term deposit where the interest is taxed at your RWT rate.
How this calculator works
With an offset mortgage, the balances of your linked everyday and savings accounts are subtracted from your loan balance before interest is calculated — you simply pay no interest on the offset portion. Two things make this powerful in NZ. First, the saving happens at your floating mortgage rate (about 7.85%), which is higher than any savings account pays. Second, the saving is tax-free: interest you do not pay is not income, whereas interest earned in a savings account loses 10.5-39% to RWT. That means $40,000 offset against a 7.85% loan effectively "earns" $3,140 a year — you would need a savings rate above 11% before tax to match that on a 33% marginal rate. Kiwibank and Westpac are the main providers; the trade-off is that offsets only work on floating rates, which cost more than fixed, so the strategy suits people holding meaningful cash balances.
NZ offset mortgage market
| Kiwibank Offset | Floating ~7.85%, up to 8 linked accounts |
| Westpac Choices Floating with Offset | Floating ~7.85%, single offset account |
| Offset saving | Tax-free, at the full floating rate |
| Savings-account alternative | Interest taxed at RWT 10.5-39% |
| Typical 2-year fixed (no offset) | ~6.25% |
| Strategy break-even | Offset benefits outweigh fixed-rate saving with large cash balances |
Worked Examples
$500,000 floating loan at 7.85% with $40,000 in offset accounts, 30% RWT saver
Offset saves $3,140/year tax-free — 2.5× the $1,260 an equivalent 4.5% term deposit would earn after tax.
- Interest avoided: $40,000 × 7.85% = $3,140/year, tax-free
- Alternative: $40,000 × 4.5% = $1,800 gross interest
- After 30% RWT: $1,800 × 0.70 = $1,260
- Offset advantage: $3,140 − $1,260 = $1,880/year
$300,000 floating loan with $15,000 offset, saver on 17.5% RWT
Offset saves $1,178/year vs $557 after tax in a savings account — still a 2.1× advantage.
- Interest avoided: $15,000 × 7.85% = $1,178/year
- Savings alternative: $15,000 × 4.5% × (1 − 0.175) = $557
- Offset advantage: ≈ $621/year on a modest balance
Built and maintained by Konstantin Iakovlev. Data sourced from the IRD and official New Zealand government sources.
Last reviewed: