Offsetting your Mortgage -

How does Offset Mortgage work ?

Every day the mortgage lender calculate ‘interest' on the balance in your savings account, at the same rate as your mortgage. No interest is paid on your savings, but at the end of each month, this amount is taken from your offset mortgage, reducing the amount you owe in the same way as an overpayment would.

Can I use Offset to reduce my monthly payments ?

Because any balance in your Offset Account is reducing the amount you owe on your mortgage, whenever the lender recalculate your mortgage payments (for example, each time the Bank of England changes its interest rate), this will be taken into account and will make your new repayments lower than they would otherwise have been.

Benefits of an offset mortgage deal

Whichever option you choose, you have access to your money without notice and there is no limit on the amount of withdrawals and deposits you can make, subject to the usual branch withdrawal limits.

But, remember, the more you have in your account, the more you can benefit with your offset mortgage deal.

  • The Offset mortgage account is opened with a Nil balance at the time that you complete your mortgage application form.
  • Once your mortgage offer has been accepted, you can put money into your savings account to offset against your mortgage.
  • There is a minimum operating balance of just £1 and you can make additional investments at any time, subject to the maximum permitted.
  • You can invest money in your Offset mortgage Account, but the amount invested should not exceed the amount outstanding on your mortgage, as you will not gain any offset benefit on any amount above your mortgage balance.
  • The higher the balance you maintain in your savings account, the more you will save on your mortgage.
  • No interest is paid on your Offset mortgage account, in effect, the money in your account will earn the equivalent of the rate charged on your mortgage.
  • You will not pay tax on your Offset mortgage deal as no interest is paid (Subject to any future changes in Inland Revenue policy or legislation).
  • You can access your funds without notice or charge.