Offset Mortgages

  • Offset mortgages utilise your savings to reduce your mortgage term or monthly payments thereby lowering the overall cost of your mortgage.
  • You can compare the latest interest rates on offset mortgages from UK lenders in the table below.

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Offset Mortgages FAQ

How does an offset mortgage work?

With an offset mortgage you can use your savings to reduce the interest payments on your mortgage. You will only pay interest on your mortgage less your savings amount. For example, if you have a £200,000 mortgage but you have £40,000 in savings you'll only pay interest on £160,000.

Will I pay more for an offset mortgage?

Yes, offset mortgages tend to have higher rates than regular mortgages.

What types of offset mortgage are on offer?

As with regular mortgages there are fixed rate offset mortgages and variable rate offset mortgages on offer, including tracker, lifetime tracker or discount rate offsets.

What fees will I pay with an offset mortgages?

As with all mortgages you could pay an arrangement fee, booking fee, valuation fee and legal fees however not all fees apply to all products.

What are the benefits of offset mortgages?

With an offset mortgage you can choose how to benefit from the savings you make on interest. You can either reduce your monthly repayments or you can pay the same each month but reduce the mortgage term, allowing you to clear your mortgage in a shorter amount of time.

What are the downsides of offset mortgages?

Your savings won't earn any interest - although that does mean you won't pay any tax on them.

Offset mortgages do tend to be more expensive so be prepared to pay a slightly higher rate.

What criteria will I have to meet to get an offset mortgage?

The criteria for offset mortgages in no different from the general criteria mortgage lenders will expect you to meet for all mortgages, such as having a good credit score and being within the lender's age limit. There's no minimum savings limit either however if you don't have a large amount of savings it is worth doing your sums to see if an offset will benefit you. You'll be paying a higher rate for the mortgage so the discount on interest that your savings afford you will need to justify that.

Most lenders will also require at least a 20% deposit.

How can I compare offset mortgages?

Using Know Your Money's comprehensive comparison tables you can compare offset mortgages by rate, fee and overall cost to ensure you find the right mortgage for you.

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