Using an offset mortgage, your savings account is linked with your mortgage loan to reduce the interest you pay and the overall cost of your mortgage. You can also link your credit card and current account to your mortgage loan in order to further reduce the amount of interest you pay. Your mortgage lender will use the interest accumulated on your savings and put this towards your loan repayments.
Offset mortgage deals can be highly useful for many people in the right situation, although they heavily rely on the use of savings to make them cost effective. If for example you have £10,000 of savings and a mortgage of £200,000 you will not have to pay interest on the remaining £10,000 of your mortgage loan as long as your savings remain linked.
Instead of earning interest on your savings, they act as a means of reducing the overall size of your mortgage. There are also several different types of offset mortgage available, and customers should therefore shop around and compare mortgage offers from different providers to find the most competitive deal
You may wish to take a look at our mortgage comparison tables below for an idea of the different offset mortgages that are available: