Is there a difference when offsetting interest in a ‘repayment’ and an ‘interest only’ mortgage?

When offsetting mortgage interest payments, does it matter if the mortgage is ‘interest only’ or a ‘repayment mortgage’?

Arthur Says

No, it does not matter.

The interest charged on both mortgages can be offset against the rental income. What this means in reality is that if you have an ‘interest only’ mortgage then the full mortgage payment will be offset.

However if you have a ‘Repayment’ mortgage then only the ‘interest repayment’ part of the mortgage will be offset. You will not be able to offset the capital part of the repayment.

This means that you need to find out from your bank for each payment what part was ‘interest’ and what part was ‘capital’. In most cases you find this out when the mortgage lender sends you your end of year complete mortgage statement.