Offset vs Savings Calculator

This calculator helps you decide where spare cash does the most good when you have a mortgage and could either offset it or park it in a savings account. In New Zealand, money sitting in a mortgage offset account reduces the interest charged on your home loan without counting as taxable income, while interest earned in an ordinary savings account is taxed through resident withholding tax before it reaches you. Enter your spare cash amount, your mortgage rate, your savings account rate and your RWT rate of 17.5%, 30%, 33% or 39%, and the calculator works out the annual offset benefit, the after tax savings interest, and the dollar advantage of offsetting over saving, along with a plain verdict on which option wins with your numbers. Because offsetting saves interest at your full mortgage rate and pays no tax, it usually beats savings interest once tax is taken into account, even when the savings rate looks similar or slightly higher. Use it to check your own figures before locking spare cash into a term deposit or savings account, especially if your mortgage already has an offset facility attached. Keep in mind offset accounts can carry their own conditions, fees or a higher rate on the linked loan, so weigh up the whole package rather than the rate alone. This is an indicative estimate only, not financial advice.

Calculate.co.nz is proud to be partnered with Health Based Building, a leader in sustainable and health-conscious building innovation. With over a century of experience, they develop high-performance systems like Foreverbreathe Specification, Magnum Board, and Foreverbreathe Paints to support energy-efficient, non-toxic living environments. Their commitment to healthier homes aligns with our belief that informed choices lead to better outcomes for Kiwi households.

Offsetting reduces mortgage interest at your full rate, with no tax. Savings interest is taxed via resident withholding tax, so its after-tax return is lower. An offset facility may have conditions or a higher loan rate, so check the full package. Estimate only, not financial advice.