Offset Mortgages

Use your savings to reduce the interest you pay on your mortgage.

Selected 2021 Offset Mortgage Offers

There are no tables for this criteria

Using your savings to offset your mortgage interest payments

Offset mortgages are interest only mortgages where you can link your savings to “offset” the interest you pay on your mortgage.

Example: If you have a £100,000 mortgage, a savings account with £20,000 and a current account with £1,000 in it, you will only pay interest on the difference between the money you have and the money you owe.

In this example you would only pay interest on £79,000.

Typically for this type of mortgage applicants will have to earn at least a set amount of income annually.

With First Direct the minimimum sole income is £50,000.

A repayment strategy will also be required as the mortgage will be on an interest only basis. the lender will need to see how you will repay the capital.

Offset mortgages are a type of interest rate deal that links your current account, savings account or credit card to your mortgage loan with the aim of reducing the amount of interest you pay and decreasing the overall size of your mortgage.

Your savings are combined with your debt and the interest you earn on your savings is used to reduce the amount of interest you pay when repaying your mortgage loan, potentially saving you a significant amount of money.

The more savings you have, the more interest you are likely to earn, and the interest accumulated on your savings is used to reduce the interest on your mortgage loan.

Offset mortgages are generally considered to very flexible, and may enable customers to:

  • Make as many overpayments as they want to reduce the overall size of their mortgage
  • Make underpayments in times when they need to dip into their savings
  • Take advantage of a drawdown facility allowing them to withdraw money from their mortgage account
  • Take payment holidays if necessary

Offset mortgages could suit you if you are a person:

  • With substantial savings that can be put to use
  • Who has a cash ISA
  • In a higher tax bracket
  • With buy-to-let properties

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