credit and redraw up to this limit. The limit may be periodically reviewed. The lender may place restrictions on the lending limits towards the end of the mortgage term with the aim of ensuring capital repayment. However many lenders allow full drawdown up to the end date of the mortgage, when the loan must be repaid. That can cause great problems for undisciplined borrowers and those approaching retirement if the lender is unwilling to extend the term (especially on the grounds of age). Other lenders have multiple accounts. There are at least a mortgage account and a deposit account. Often, the lender allows multiple accounts for credit balances and sometimes for debit balances. The different accounts allow borrowers to split their money notionally according to purpose while all accounts are offset each day against the mortgage debt. Savings versus reduced interest Offset mortgages are helpful because the interest rates on mortgages are higher than the interest rates of a savings account. For example, if one has a home loan of $600,000 at 5% per year and an offset account in which one has deposited $200,000, one would be charged interest only on the $400,000 ($600,000 − $200,000). The new interest payable then amounts to $20,000 ($600,000 × 5% - $200,000 × 5% = $400,000 × 5%). Therefore, the interest has been basically reduced by $10,000 (200,000× 5%) in comparison to the original interest, $30,000. Without an offset account, the $200,000 would be saved in a savings account, which would have an interest rate of 3.5% per year. If the money is in the account for one year, the interest earned would amount to $7,000 ($200,000 × 3.5%). The former option allows reducing the interest by $10,000, and while the latter gives $7,000. Therefore, putting money in an offset account allows saving more money by reducing interest than any interest earned in your savings account. In some countries like Australia, government bodies like the Australian Taxation Office also tax any interest earned from savings, which reduces savings even more. Tax advantage Offset mortgages may have tax advantages for the borrower. Instead of earning interest on the credit balance (which may incur tax), the credit earns a reduction in the mortgage interest paid (which does not). For example, in the UK, offset mortgages are often marketed as offering "tax-efficient" savings. Interest generated within deposit accounts for UK residents is deemed income and