What is an offset mortgage and is it worth it?

Short answer: Savings reduce loan balance for interest calculation. Pay interest on net amount. Access to savings remains.

What this actually means in plain English

Your savings account is linked to your mortgage. The bank only charges interest on the difference. If you owe $400,000 and have $50,000 savings, you pay interest on $350,000. You still have access to your savings. It saves more interest than a savings account pays. But the mortgage rate is usually slightly higher.

Key Facts

Savings offset loan balance for interest
Interest calculated on (loan - savings)
Savings remain accessible
Saves more than separate savings account interest
Offset mortgage rates often slightly higher
Best if you keep significant savings

Example

Loan: $400,000

Savings: $50,000

Net Balance: $350,000

Interest Saved: ~$3,500/year

Vs Savings Account: Savings account pays ~$2,000/year

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