The mortgage offset is a specialised form of an offset mortgage, which deals with merging an old mortgage with the deposit accounts present at the same bank or financial institution. As per the mortgage offset deals, the amount in the savings account may be used for offsetting the mortgage balance.

In this regard, the bank will decide over a primary loan or credit limit, with an interest rate, for any loaned out funds. It has to be noted that the savings account needs to be a non-interest bearing account. This will enable the bank to earn a progressive return over the balance in the account.

In fact, mortgage offset quotes are the best solution for people having enough savings to handle loan repayments without any doubt. Besides this, the borrower is able to make smaller instalments to clear off the principal amount in place of interest only.

Original Source: https://www.quora.com/What-is-a-mortgage-offset/answer/Ranjit-Singh-3890