To enter an offset mortgage:
1. Create an offset cash account in the Savings screen. The Account Type can be either Savings or Current. As you enter the details of the account, check the Advanced Settings > Growth panel to ensure that an appropriate rate of interest is being applied - ordinarily, one would not receive any credit interest, from an offset-linked cash/savings account.
2. Go to the Debt screen and enter the details of the mortgage, or select an existing Debt item in the Ledger.
For those wishing to model the offset mortgage as a form of interest-only mortgage, please refer to the Tips below.
3. Expand the Offset Mortgage panel, under Advanced Settings, and click the dropdown menu to view all of the Savings and Current Accounts in the plan (excepting the software's default cash accounts (e.g. John's Cash). Select the applicable offset account and hit OK.
If you had already entered an existing (conventional) mortgage and have switched this to an offset, you will probably have noticed an instant decrease in the Actual Years to Payoff calculation and, correspondingly, in the trajectory of the line graph at the bottom of the screen. This is because the balance held in the linked offset cash account is now being offset against the outstanding balance of the mortgage.
4. Click Add or Update to save your changes.
Note: A link icon will display next to the mortgage in the ledger, right. Click this icon to view the items linked to the mortgage, including the property (linked from the Property/Assets screen's Debts panel) and the offset deposit account. The items in this pop-up window are active links, which you can click to jump to details about the account on the Savings screen.
Tips: Offsets as a form of interest-only mortgage
For those wishing to model the offset mortgage as a form of interest-only mortgage (because the individuals are making regular payments into their offset account, until such time as the mortgage is to be repaid, rather than paying-down the principal, year-on-year), note that the Payment Amount (initially specified in the Debt screen) will not automatically decrease in recognition of the fact that a decreasing amount of interest is owed, year-on-year (as funds accrue within the cash offset account).
Any changes to the annual mortgage payment, need to be entered using the step-up/step-down facility (under Advanced Settings) in the Debt screen.
As it may be cumbersome to change the mortgage expense item year-on-year, over a prolonged period of time, one alternative is to average-out the interest payments over the period, so that the capital, which is to be repaid does, in fact, correspond (as closely as possible) to the value that has accrued in the offset account.
Further Reading: Step-by-Step: How to enter an interest-only mortgage