New Zealand homeowners could be saving thousands each year, but many remain in the dark about how offset mortgages work.

A recent survey found almost half of respondents either don’t know much about offset mortgages or had never heard of them.

Even among those who have, nearly a third wrongly believe they only benefit people who hold large bank balances year-round.

Offset mortgages allow borrowers to link their everyday accounts to their home loan, reducing the balance on which interest is charged.

This means even short-term savings, like wages before bills are paid, can cut interest costs.

Data from 2024 shows that customers using offset-style products collectively saved around $200 million in interest.

More than 13,000 homeowners even paid zero interest for parts of the year, with average rates reduced to just 1.71% p.a.

For Coasties juggling higher living costs, the message is clear: there may be untapped ways to make money in the bank work harder against the mortgage.

Despite the potential benefits, only about one in four survey respondents said they currently use offset accounts with their loan.

Myths about complexity and suitability for only the wealthy appear to be holding people back.

With mortgage rates still sitting around 5–6%, offsetting offers an alternative to traditional savings, effectively earning the same as the interest avoided.

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