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An interest offset mortgage combines saving account deposits and a mortgage in one line of credit account.

Each month, the lender looks at how much you owe on the mortgage and then deducts the amount you have in savings. You pay mortgage interest just on the difference between the two. For example, if you have a mortgage of $100,000 and savings of $10,000, your mortgage interest is calculated on $90,000 for that month.

This cuts the amount of interest you pay but the mortgage rate is likely to be more expensive than on other deals. You can still access your savings if you need to but the more you offset, the quicker you’ll repay your mortgage.

Unlike most mortgages, offset mortgages calculate interest daily as opposed to monthly. That ensures deposits immediately offset debt, with the aim being greater interest savings. 

National Bank’s All-in-One and Manulife’s One are two popular examples of offset mortgages.