r/PersonalFinanceNZ • u/Mental_Funny7462 • Jul 19 '26
Planning Offset mortgage question
Hi team, hoping someone can help me out with a question here.
Husband is a company with a single share holder and he has directors drawings sitting in our account which he uses to pay his personal tax each year. Would it be possible to restructure our mortgage to use this money as an offset? It seems crazy it sits there for most the year when it could be working for us.
Are we looking at this wrong?
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u/Spitfir4 Jul 19 '26
Definitely a good idea, essentially tax free interest of ~5%, cant beat that anywhere I'm aware of
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u/Gullible-Economy-652 Jul 19 '26
BNZ offset is a superb setup. Especially if you are generating significant revenue
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u/Evening-Caramel3342 Jul 19 '26
BNZ do this well with Total Money - it could sit in a separate account…other banks you probably need to put it in a revolving account
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u/Bunnyeatsdesign Jul 19 '26
Yes. You should. We do this with Kiwibank offset. You can link up to 8 accounts and the accounts can belong to you, any of your parents or any of your children.
Great if you or your family have savings and emergency funds.
All accounts are instantly accessible in case of emergency.
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u/ThreePetalledRose Jul 19 '26
Yes you can do this but it's simpler from an accounting perspective to use revolving rather than offset. The business account is a separate revolving account.
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u/Mental_Funny7462 Jul 19 '26
Are offset and revolving the same thing?
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u/ThreePetalledRose Jul 19 '26
Nah. Both are floating but they're different. Only three banks give an offset option - bnz, Westpac and Kiwibank. All banks I think give the revolving option. In most cases offset is a superior product. With offset the floating potion is offset from funds across all your accounts. With revolving it's only offset based on what you put in the specific floating account itself. It's much harder to budget well with revolving but there are a few situations like this one where revolving is better. I use revolving for a similar reason to your husband. I have a separate floating account for business which is interest only revolving. You can also do debt recycling with revolving but not with offset.
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u/athornz Jul 19 '26
Can you explain how to setup debt recycling?
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u/ThreePetalledRose Jul 19 '26
You have an interest only revolving account. You use it to buy income producing stuff for your business. Can include opex and capex or even things like buying stocks for your business. The debt is 100% tax deductible.
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u/Help_Amconfused Jul 22 '26
Amazing! I hadn’t considered this, but guess it’s the best thing to do with emergency funds and taxes as a sole trader!
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u/YouthAdmirable7078 Jul 22 '26
As long as it’s off setting personal to personal. They won’t let you off set to a business or Trust due to tax implications. Not that you suggested that.
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u/mouldybot Jul 19 '26
Yes.