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New Zealand Offset & Revolving Credit Calculator

See how much interest you could save, and how many years sooner your home loan could be gone, by keeping savings in an offset account or a revolving-credit facility.

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Savings held in an offset account, or the average balance sitting in a revolving-credit facility. Assumed constant for this illustration.

Interest you'd save$224,663.74
Years shaved off the loan5.9 yearsPaid off in 289 months instead of 360
Standard monthly payment$3,160.34Unchanged by offsetting; only the balance interest is charged on shrinks
Total interest without offset$637,722.44
Total interest with offset$413,058.70

How this calculator works

With an offset account or a revolving-credit facility, the money you hold is netted off your loan balance before interest is charged. You earn no interest on that money, but you avoid paying loan interest on the same amount. The calculator runs two month-by-month simulations at the same scheduled repayment, one plain loan and one with the balance offset, and compares the total interest and the payoff time:

Monthly interest = (loan balance − offset balance) × monthly rate

Because less interest is charged each month, more of your unchanged repayment goes to principal, so the loan clears earlier and total interest paid falls rather than the repayment itself changing.

Worked example

Take a $500,000 loan at 6.5% over 30 years, with $50,000 held steadily in a linked offset account. Interest is charged each month on only $450,000 of the balance rather than the full $500,000, so more of the same repayment reduces the principal. The result is a large cut in total interest and a payoff date several years earlier than the same loan with nothing offset. Keep more in the account over time and the saving grows; let it fall and the saving shrinks.

What changes your saving

  • Balance held — the main lever; a larger steady balance offsets more interest.
  • Interest rate — the higher your rate, the more each dollar offset is worth.
  • Term remaining — a longer remaining term gives the effect more time to build up.
  • Whether the balance holds — a revolving credit only saves if you keep the balance down rather than letting it creep up.

A note on accuracy

This calculator computes both schedules on full, unrounded figures and rounds only for display. It models a full offset and a constant balance, which keeps the illustration clear; your real saving varies as your balance moves. Offset home loans are offered by some NZ banks, while revolving-credit facilities are widely available. For general guidance, see Sorted, and our methodology for the formulas and sources.

Frequently asked questions

How does an offset account work in New Zealand?

An offset account is a savings account linked to your home loan. Its balance is netted off the loan before interest is worked out, so with a $500,000 loan and $50,000 in the offset, you are charged interest on $450,000. You earn no interest on the offset savings, but you avoid paying loan interest on the same amount, which usually comes out ahead because savings interest is taxed while the interest you save is not.

What is a revolving credit facility?

A revolving credit facility works like a large overdraft secured against your home. Your pay goes in and your spending comes out of the same account, and interest is charged on the balance day by day. When your salary sits in the account it lowers the balance and the interest, much like an offset. It rewards discipline: because there is no fixed repayment forcing the balance down, you need to keep the balance trending lower rather than creeping up.

Does my repayment go down if I use an offset or revolving credit?

Not with an offset on a standard table loan. Your scheduled repayment stays the same; because less interest is charged, more of each repayment clears the principal, so the loan is paid off sooner and total interest falls. A revolving credit facility is more flexible, since you set how much to pay down, but the same principle applies: a lower average balance means less interest.

Which is better, an offset account or a revolving credit facility?

They save interest the same way, so it comes down to how you manage money. An offset keeps your savings in a separate account while still reducing loan interest, which suits people who like a clear line between savings and the mortgage. A revolving credit merges the two, which can save more if you consistently keep the balance low, but can cost more if the balance drifts up. Many people use a revolving credit for part of the loan and a fixed table loan for the rest.

How much could a $50,000 balance save me?

It depends on your loan size, rate, and term, but on a $500,000 loan at 6.5% over 30 years, holding $50,000 in an offset or revolving credit can save a five-figure sum in interest and take a meaningful chunk of time off the loan. Enter your own figures above for an exact result.

Does this calculator assume my balance grows over time?

No. It holds the offset or revolving-credit balance constant for the life of the loan, which keeps the illustration clear. If your balance grows as you save, your real saving would be larger than shown here; if it drifts down, smaller.

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