Offset home loans are offered by three banks in New Zealand;
BNZ
Kiwibank
Westpac
They have advantages in some situations, but even many people that have the loans are not using them as well as they should.
How Offset Home Loans Work
Offset home loans can reduce the amount of interest you pay on your home loan, by using money in your everyday and savings account to ‘offset’ your home loan interest charges.
The banks differ slightly on how they operate offset home loans, but the advantages are;
- You can keep a balance in your everyday account and use this to offset your home loan interest.
- You can keep a balance in your business account and use this to offset your home loan interest.
- Your parents can keep a balance in their everyday account and use this to offset your home loan interest.
Its quite a simple concept really, but often not well explained.
Your mortgage adviser may suggest this as a good way to manage your home loan.
