An
offset loan is a type of lending arrangement, usually for a
mortgage, in which a
borrower also maintains a
savings account with the
lender. Instead of receiving
interest on the savings account, the interest payment due on the loan is calculated only on the net balance of the loan less the savings account. The regular payment is calculated on the full amount of the loan, however, so making regular payments will pay off the loan faster than a standard loan with the same interest rate, amount, and periodic payment.