Mortgage Offset Account¶
| Product ID | PRD-011 |
| Launch tier | 3 |
| Jurisdiction | NZ + AU |
| Status | Planned |
| Regulations | CCCFA 2003 · NCC Act 2009 (NCCP) · AML/CFT Act 2009 · AML/CTF Act 2006 · Privacy Act 2020 · Privacy Act 1988 |
A mortgage offset account is an at-call deposit account linked to a nominated home loan. The deposit balance is netted against the loan's outstanding principal each day before interest is calculated — reducing the effective loan balance on which interest accrues, without requiring the customer to make additional repayments.
Key terms¶
| Term | Value |
|---|---|
| Account type | At-call deposit, linked to a nominated home loan |
| Offset mechanism | Daily: deposit balance subtracted from loan principal before interest accrual |
| Interest saved | (offset_balance / loan_outstanding) × daily_loan_interest — updated daily |
| Interest on offset account | None — benefit is the reduction in loan interest, not separate interest income |
| Withdrawals | Unlimited; at-call; withdrawal reduces interest saving from the following day |
| Minimum offset balance | None |
| Linked loan requirement | Active amortising or revolving loan held with same institution |
| Fee | Per fee schedule |
| Statement frequency | Monthly |
System capabilities¶
Offset netting is applied to the actual daily closing balance — not a monthly snapshot or average. Interest saving is displayed in real time in the app as a daily accumulator. Balance changes are reflected in next-day interest accrual with no manual intervention. The offset benefit is calculated automatically by MOD-005 on each accrual run — the customer does not need to claim it.
Eligibility¶
The customer must hold an active amortising or revolving home loan with the bank. The offset account is opened as a linked product to that loan. KYC must be current per AML-003. Credit status of the linked loan is monitored per CRE-001.
Account / facility opening¶
- Customer selects the offset account from the product menu in the app or via a relationship manager.
- MOD-105 confirms the customer holds an eligible linked loan.
- MOD-049 captures consent; MOD-050 delivers pre-contractual disclosures including fee schedule and product summary.
- MOD-007 opens the account and establishes the offset link to the nominated loan.
- The offset relationship is active from the first business day after opening — no waiting period.
Fees¶
| Fee type | Amount |
|---|---|
| Monthly account fee | Per fee schedule |
| Transaction fees | Per fee schedule |
Fees are applied by MOD-110 and posted to the offset account or nominated settlement account as applicable.
Interest / charges¶
No interest is paid on the offset account balance. The economic benefit is delivered through the reduction of interest charged on the linked loan. If the offset balance equals or exceeds the loan's outstanding principal, effective interest on the loan for that day is zero.
Statements¶
MOD-113 generates a monthly statement showing the offset account balance, transactions, fees, and the daily interest saving accumulated during the period. Statements are delivered to the customer's in-app document vault.
Closing / exit terms¶
The customer may close the offset account at any time. Closing the offset account does not affect the linked loan. If the linked loan is repaid in full, the offset account automatically converts to a standard at-call deposit account unless the customer elects to close it. No penalty applies for closing the offset account.
Regulatory¶
New Zealand: Credit Contracts and Consumer Finance Act 2003 (CCCFA) where the linked loan is a consumer credit contract. AML/CFT Act 2009 per AML-003. Privacy Act 2020 per PRI-001.
Australia: National Consumer Credit Protection Act 2009 (NCCP). AML/CTF Act 2006 per AML-003. Privacy Act 1988 per PRI-001.
Governing policies¶
- CRE-001 — Credit Risk Management Policy
- CRE-002 — Responsible Lending Policy
- CON-004 — Product Disclosure & Sales Practice Policy
- CON-005 — Fee & Pricing Transparency Policy
- CON-006 — Product suitability and governance
- PAY-001 — Payment Operations Policy
- AML-003 — Know Your Customer (KYC) & Identity Verification Policy
- PRI-001 — Privacy Policy
Implementation modules¶
| Module | Name | Status |
|---|---|---|
| MOD-001 | Double-entry posting engine | Deployed |
| MOD-002 | Immutable transaction log | Deployed |
| MOD-003 | Real-time balance engine | Deployed |
| MOD-005 | Daily accrual calculator | Deployed |
| MOD-006 | Rate change propagation | Deployed |
| MOD-007 | Account state machine | Deployed |
| MOD-020 | Pre-payment validation suite | Deployed |
| MOD-021 | Payment limit & velocity controller | Deployed |
| MOD-044 | JWT role-based access control | Deployed |
| MOD-049 | Open banking consent management | Deployed |
| MOD-068 | Authentication & session management | Deployed |
| MOD-105 | Product eligibility engine | Not started |
| MOD-110 | Fee engine | Deployed |
| MOD-113 | Statement generation | Not started |
| MOD-114 | Direct debit mandate management | Deployed |
Compiled 2026-05-22 from source/entities/products/PRD-011.yaml