We have a few banks in New Zealand, but only three offer an Offset Home Loan (BNZ, Kiwibank and Westpac) which is surprising given how popular they are as a way to easily manage your money while saving on the interest that you pay.
Most banks offer a revolving credit which can be a good option too, and all of these banks offer a revolving credit option too – but the Offset is an option that works really well for people that do not like the idea of a revolving credit or who want to have more flexibility.
Given there are just a few banks offering the Offset it was not too difficult to do a comparison and find out how they differ, and therefore work out what bank offers the best Offset Home Loan.
Offset Home Loan Review
We looked at the three banks that offer the Offset Home Loan there are a few differences.
BNZ Offset Home Loan
BNZ call their Offset Home Loan a TotalMoney home loan.
With BNZ your parents or children can group their accounts with your TotalMoney home loan to help reduce the interest you pay and you can link up to 50 accounts in one TotalMoney group which is a huge number of account, but it also links with the philosophy at BNZ where they suggest you have accounts (buckets) for individual types of expenses.
You can also have TotalMoney even when borrowing over 80% which is a good option, where most other banks will not allow you to have a revolving credit if you were in the same situation. At BNZ they have no limit to how much of your mortgage and so you could have 100% of your lending as TotalMoney if it suited.
They also say that by offsetting with a TotalMoney home loan you could pay less interest and become mortgage-free faster which is true.
Kiwibank Offset Home Loan
Kiwibank don’t have any fancy name for their offset loan (but also known as an offset mortgage) .
They key point they make is it 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 – helping you to pay off your home loan faster.
There is no limit to how much of your mortgage you can have as an Offset.
They allow you to offset up to 8 bank accounts and these can be accounts belonging to you, your spouse, parents and children. The bank accounts need to be in personal names not allowing trusts or companies to be linked.
Westpac Offset Home Loan
Westpac call it a Choices Floating Home Loan with Offset, and say that you can choose to offset your savings against your home loan and only pay interest on the difference meaning this option could save you thousands on interest repayments and cut years off your home loan.
They also say that there is no limit to how much of your mortgage you can have on an Offset, but they do want to know if you plan to have a larger amount as it might not be beneficial given the floating interest rates are higher than fixed rates – with all three banks.
Summary of Options
While most features are similar we have listed the key features in the table below.
| BNZ | Kiwibank | Westpac | |
|---|---|---|---|
| Account Limit | None | None | None |
| Offset Accounts | 50 | 8 | 10 |
| Personal Names | Yes | Yes | Yes |
| in name of Trust | No | No | Yes |
| in name of Company | No | No | Yes |
| Visit Bank Websites:: | Find Out More | Find Out More | Find Out More |
A Great Option For Parents To Help
Another way that Offset Home Loans work really well is when family (usually parents) have cash on deposit with their bank and would love to help their child with the mortgage, but also want to retain control of their own money.
The parents can hold their money in their own bank account, but link to their child’s mortgage so that effectively they are giving their child a portion of the mortgage with zero interest.
This is a great way for parents to help their children financially, but with zero risk!
It also avoids any issues with gifting or with the tax.
Our Mortgage Advisers Can Help
Whether you just want to know more, or are serious about restructuring your mortgage to make the most of the Offset options then we are here to help. Our advisers know a lot about the Offset Home Loans and can show you how to get the most benefit from them too.
