Offset Mortgage Definition
A type of flexible mortgage that blends a traditional mortgage with deposit accounts. Both the account and the loan are held at the same banking institution, and the mortgage holder's net balance is computed by subtracting the savings balance from the mortgage balance. The savings account is usually a non-interest bearing account, but the interest of the loan is calculated only on the net balance. Borrowers can remove savings from their account, in this case the next mortgage payment will be calculated on a higher balance.