A New Zealand revolving credit mortgage is not an offset account with a Kiwi accent. The facility is the loan: a secured overdraft-style limit where interest accrues daily on whatever you have drawn. Parking salary in that facility temporarily lowers the drawn balance and cuts interest for every day the money sits there.
This calculator estimates annual interest with and without salary parking, then compares it to a fixed table loan on the same effective average balance so you can see whether the floating rate premium is worth the flexibility.
How the estimate works
| Step | What we do |
|---|---|
| Cap drawn balance | Never above the credit limit |
| Salary parking | Average reduction ≈ monthly net income × park fraction × 0.5 |
| Effective balance | Drawn balance minus that average reduction |
| Revolving interest | Effective balance × floating rate |
| Fixed comparison | Same effective balance × fixed rate |
V1 does not model a reducing credit limit, fees, or a full amortisation schedule. Use it to size the interest effect, then confirm numbers with your lender.
Worked example: $80k drawn on a $100k facility
| Input | Value |
|---|---|
| Credit limit | $100,000 |
| Average drawn balance | $80,000 |
| Floating rate | 7.00% |
| Monthly net income | $6,000 |
| Salary park fraction | 0.5 |
| Fixed comparison rate | 5.50% |
| Result | Figure |
|---|---|
| Effective average balance | $78,500 |
| Revolving interest (with parking) | $5,495 |
| Revolving interest (no parking) | $5,600 |
| Salary parking saving | $105 |
| Fixed interest on same effective balance | $4,318 |
| Rate premium cost | $1,178 |
| Net vs fixed | −$1,095 |
Salary parking helps a little here, but the floating premium still dominates. That is common - revolving credit buys flexibility and cash-flow control, not an automatic interest win versus a sharp fixed rate.
When revolving credit tends to win
- You reliably park a large share of income for most of the month
- The floating-to-fixed gap is narrow
- You value redraw access more than locking a fixed rate
- You are disciplined enough not to redraw every spare dollar
Run your own numbers in the calculator above, then cross-check with the NZ break fee calculator if you are weighing a break out of a fixed loan to move into revolving credit.
Frequently asked questions
What is a revolving credit mortgage in New Zealand?
A revolving credit facility is a home loan structured like a secured overdraft. The facility IS the loan - you draw against an approved limit and pay interest daily on whatever is drawn. It is not a separate savings account sitting next to a table loan.
How is NZ revolving credit different from an Australian offset account?
An Australian offset is a transaction or savings account linked to a separate home loan - the savings balance offsets interest on the loan without reducing the loan principal. NZ revolving credit IS the loan itself. Parking salary reduces the drawn balance directly, which cuts interest for every day the money stays there.
How does salary parking save interest?
Interest is charged on the drawn balance. When your salary lands in the facility, the drawn balance drops until you spend the money. Lower balance for part of the month means less interest over the year. This calculator approximates that as monthly net income × park fraction × 0.5.
Why does revolving credit often cost more than a fixed loan?
Floating revolving rates usually sit above comparable fixed table-loan rates. Even with salary parking, the rate premium can outweigh the parking saving. The calculator shows both so you can see whether the flexibility is worth the extra interest.
What numbers does this calculator use for the worked example?
Limit $100,000, average drawn $80,000, floating 7%, net income $6,000/month, park fraction 0.5, fixed comparison 5.5%. Effective average balance is $78,500. Revolving interest is about $5,495/year; without parking $5,600; fixed on the same effective balance about $4,318. Salary parking saves about $105; the rate premium costs about $1,178.
Does this model a reducing credit limit?
No. V1 estimates annual interest from an average drawn balance with a simple salary-parking adjustment. It does not model a reducing limit, transaction fees, or day-by-day redraw behaviour.
Should I put my whole salary into revolving credit?
Only if you still keep an emergency buffer and can track spending so you do not redraw more than you planned. Salary parking only helps while the money actually sits in the facility. Talk to your broker or lender before changing how pay is deposited.
Is revolving credit the same as a flexible home loan redraw?
Related idea, different product. Redraw usually means you have prepaid ahead of schedule on a principal-and-interest loan and can pull that prepaid amount back. Revolving credit keeps a standing credit limit you can redraw up to at any time, with interest always on the drawn amount.
Where do the rates come from?
You enter them. Product pricing moves with the OCR and each bank's margin. Check your lender's current floating revolving rate and a comparable fixed rate before relying on the comparison.
Sources
Last updated: 20 September 2026