Offset Mortgages: Are They Right for You?

Written By Rowan Frayling

If you have savings and want to reduce the interest on your mortgage, an offset mortgage could be the smart choice.

What Is an Offset Mortgage?

An offset mortgage links your mortgage account to your savings. Instead of earning interest on your savings, you reduce the amount of your mortgage that interest is charged on.

Example:
If you owe £150,000 but have £20,000 in savings, you only pay interest on £130,000.

Key Benefits

  • Pay less interest over time

  • Potential to shorten your mortgage term

  • Flexible access to your savings

  • Tax-efficient (you don’t pay tax on savings interest because you don’t earn any)

Things to Consider

  • May come with slightly higher rates than standard mortgages

  • Only suitable if you have a good chunk of savings

  • Interest isn’t ‘earned’ on savings, so it’s best for higher-rate taxpayers

Is It Right for You?

Offset mortgages are ideal for people with stable savings who want to make their money work harder. If you’re self-employed or saving for school fees or a future project, this could be the perfect flexible solution.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Rowan Frayling
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