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Offset mortgages

Offset mortgages are a bit of a mystery; not many people know what they are, but they can save you money and help you repay your mortgage faster.

If you need help at any step of the way and would prefer to speak to someone call our mortgage service which is provided by Seico Mortgages: 0800 840 6500

CompanyLoan to ValueInitial RateAPRPeriodProduct Fee
10-15%5.19%4.5%2 Years£995Proceed
75-85%4.74%4.4%5 Years£0Proceed
75-85%4.54%4.5%5 Years£995Proceed
60%2.28%4.5%2 Years£995Proceed
85%4.58%4.7%5 Years£0Proceed

What are offset mortgages?

There’s plenty of confusion surrounding offset mortgages – a uSwitch poll found that the equivalent of 1.6 million people didn’t know what an offset mortgage was, while one million thought offsetting was too complicated.

However, there’s nothing really that complicated about offset mortgages.

With an offset mortgage, your mortgage and savings account are combined into one single account.

This means that the money you have in your savings account can be counted as a temporary overpayment towards your mortgage. However, unlike overpayments, with an offset mortgage your savings are still accessible and you can get at them if you need to.

As with a standard mortgage, you can get discounted, fixed and tracker rate offset mortgages.

How much could I save with an offset mortgage?

If you were to offset the average savings pot of £2,831 against a £150,000 mortgage and you also made a £200 deposit into the account every month you would build up savings of £5,213 over a year – and this would save you £221.17 in interest charges. Over time, you could save almost £40,000 in mortgage interest, as well as cutting seven years off your mortgage term – all completely tax free.

Wouldn’t I be better with a savings account than an offset mortgage?

For many people, offsetting your savings against your mortgage could offer a much better deal than keeping the cash in a normal savings account. With a typical variable rate savings account paying just 0.83% AER, a saver with the average balance of £2,813 would earn just £23 a year in interest, compared with the £221.17 they could save in interest payments alone with an offset mortgage.

Don’t you need a lot of savings for offsetting to be worthwhile?

You don’t need to have a high savings balance to benefit from offsetting. As long as you have a mortgage rate that is higher than your savings rate after tax, you will be better off by offsetting for a little as one year. In addition, you have the added security of being able to access the savings at any time unlike making overpayments.

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